Starting your own brand new firm? You must have already put in a lot of groundwork before you got to this point. However, there is just a little further to go to ensure that your business does not face the challenges that other start-ups typically do. To begin with, take a look at five of the most common pitfalls that derail great business ideas at the early stages:
NOT making a business plan
Think of your business plan as your roadmap to success. When you set out creating your business, you have certain goals that you wish to achieve. But how does your business get there? Your business plan is a good way for you to lay out the path to those goals.
The business plan covers every aspect of your new firm. What it will do? Who are its customers? How will it do business? Who will work in it? It gives a comprehensive idea of what your business is all about. Once you have this laid out, you have a clearer picture of where you stand, where you need to be and how to get there. Without a clear business plan, you may find yourself floundering very soon after the launch.
NOT determining the need for your product/service
While this may not sync with your dream of doing something you love, this is a practical way to approach a new business. One of the very first things to do is to determine whether your product or service has enough demand to make your business profitable. Once you find out, you know if you can make adequate earnings from choosing this niche. While you may be disappointed with what you find, you will be safe from investing money in something that may not be a viable proposition.
NOT knowing your audience
Equally important is to understand your market or target audience. Invest enough time to find out who is your customer, what they feel, how they like to be advertised to and how they search for your service/product. These insights will give you a great grasp over how to market your business effectively too. Lacking in this area will hurt your business unnecessarily. You may have the perfect product or service but fail to attract customers merely because you have been unable to communicate your presence to them in the right way. Knowing and understanding your audience also helps you ideate products/services in line with their needs.
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NOT having enough capital
A shocking number of businesses fail because of a lack of adequate capital. With a start-up, you should have a clear idea of where you need to invest cash not just for setting up the office but also to run initial operations. Not having enough capital means that you may have to put the brakes on critical expenditure that brings your entire operations to a grinding halt. Remember that this could be a disaster if you already have staff hired and salaries mounting and projects halfway done.NOT pricing yourself right
Many first-time business owners make the mistake of undervaluing their product/service. If the niche you are in is competitive, this could be a very attractive proposition to wage a price war. However, there are two ways in which this can go against you. One, you are undermining your market value by appearing to lack confidence in your business or its quality. Two, your pricing may simply not be viable or sustainable in the long run. While it is important to price your product/service competitively and remain affordable, it is also important to NOT seem like you lack faith in your business offerings.
Protect your business from risks
When you start your new firm, you have a lot of money, time and energy invested in it. It stands to reason that you want to protect it all from risks. That’s why you need business insurance. Business Insurance safeguards all your business assets- your office, your inventory, equipment, and so on from damage from different factors. For example, if your office is damaged in a fire and a portion of it has to be rebuilt, your business insurance may cover the loss and the costs of the reconstruction. Thus, it protects your business from the financial impact of the fire.
When you take out your business insurance plan, you should pay attention to what is covered under it and what is not. A typical plan covers any material damage to the physical assets of the business and the financial loss you sustain because of the disruption of business operations. In locations where natural calamities are a common occurrence, coverage for these may be included in a general business insurance plan.
Not doing the right things when you start your business can be a very costly mistake. Avoid these common pitfalls to ensure your business sets its best foot forward and protect it with the right insurance to safeguard it from common risks.