Coming up with a perfect business idea could be tedious; and if you think you have conquered a sizable amount of challenges, you could be wrong. There are a lot of common mistakes peculiar to startup businesses.
I talked to a friend of mine, Nkechi, earlier today; she sounded so distraught. Her ‘first time ever’ business collapsed a few months ago and left her penniless and in debt. We got talking and she had a lot to say, ranging from the mistakes she made, down to the things she learnt. In the course of talking, I also learnt a few things that I am going to share with you so we don’t make some of the mistakes Nkechi made.
Ways To Avoid Mistake In A Start-up
1) Treading Unknown Grounds
Nkechi was very good at professional makeup but she didn’t focus on what she knew. She didn’t develop her talents in that field. Instead, she went on to a new territory she knew nothing about all because everyone was going into it. Well, it eventually rendered her broke.
Here is the thing: simply stick to what you know, what you are familiar with, what you are good at.
Don’t go into a business venture you don’t have a clue about or let the fact that a lot of people are venturing into it cloud your judgment. Don’t get me wrong it’s wonderful to think big and have dreams but it is important to always remember what your boundaries are.
Build on what you already know, and be better at it.
I am not saying you can’t learn or try out new things but you have to be careful, well-grounded first and have done your research before you explore so you don’t crash and burn.
2) Identify The Basic Needs
You already have an insight as to what you are good at and you have carried out adequate research on it. The next step, however, is to identify the basic things you need to start and how to get them – gadgets, technology, manpower, location, etc.
Over time I have noticed that some startup businesses do not need an office space. Working from home is possible in some cases and it helps save cost.
Take Nkechi for example, she got into the IT field and incurred a rent space of over 700,000 Naira! Without having a major client yet, when she could have been running her business from home efficiently.
My advice here is don’t go overboard with your startup needs and end up eating out of your capital without even fully starting.
3) Establish Your Short And Long Term Goals
What are your goals for this business?
What are your targets?
Where do you see your business in a few months or years? …Yes I am talking about the life span.
Is it a bread and butter kind of thing? …only to meet daily needs and obligations?
Do you have hopes of partnering with the said to be ‘game changers’ in your field? Or you possibly see yourself expanding eventually? Or you want to push the business for a little while and then sell?
You have to sit down and critically examine what you want out of this business venture and how you hope to achieve them.
Do not set unrealistic goals. They can drain you emotionally and end up hurting your credibility if you fail to meet them.
4) State Your Plan And Purpose
Decision making comes easily when you understand the reason for the business’ existence. Startup businesses should know why their business exists.
It is important to know where you want your business to be one year from now to a minimum of three years after the startup date.
Also, developing a plan to achieve goals is a requirement for a business’ success even if you are only just starting out.
5) Business Plan
Startup businesses need detailed business plan. It serves as a guide for decision-making in your business. It embodies the vision, the mission, the strategies, and the purpose of your business.
Even though it is best written by a professional, getting good advice from successful business entrepreneurs could also guide you along the way.
Ensure you a have clear, easily understandable business plan that every member of your team can interpret easily and correctly. It would assist them in carrying out their tasks efficiently and effectively.
6) Budgeting For Startup Businesses
It is not strange for startup businesses to operate without financial guidelines or a clear budget in place. This is wrong.
Every strategy and goals should have a clear budget stating the expenses to be incurred and the income to be expected.
The absence of a clear budget can make you overspend on the unnecessary, causing more expenses than income which could, in turn, lead to debts and the untimely collapse of your business.
Nkechi’s lack of financial discipline as well as a clear budget led her to so much debt even after her business went with the wind.
To ensure profitability, budget regularly to fund your strategies and goals.
7) Marketing For Startup Businesses
Now you are successfully in a business environment you understand, the next step is to advertise your business venture not just by word of mouth because that could only get you so far in respect to awareness but also through the social media platforms e.g. Twitter, Facebook, Instagram, and the likes to create major recognition.
Your business needs to have a web presence. It should also be up to date and as modern as possible because your customers may want to research your business and your website would most likely be the first impression they have.
8) Don’t Eat Out Of Your Capital
Nkechi ultimately lost out because she could not just stop spending! So much personal expenses, so much frivolities! It eventually ran her business into the ground.
Exercise disciple when it comes to your finances. Don’t spend so recklessly that you eat your capital in the process.
Yes, the whole point of a business is to enable you have a good standard of living but at the same time it is to make a meaningful profit over time.
9) Customer Service For Startup Businesses
With a whole lot of competitors in your field, good customer service on your end could set your business apart and make you successful.
Treat your customers well and it would not only ensure their happiness and loyalty but it would increase your reputation and customer base as well.
10) Giving Out Credit Too Easily
You cannot debate the need to have good customer service and relationships but do not let yourself be taken advantage of in an attempt to please your customers.
Let your customers understand nicely your terms of payments before going into business with them.
11) Undercharging Your Products
Start-up business owners are often under the illusion that when they undercharge their products it gets them more customers and it chases out the competition. Is it truly something you can afford to do with this economy?
No matter how many customers you have, eventually, it leads to low profits and cash flows when you do not receive maximum rewards for your efforts.
Also, it isn’t uncommon for some customers to view your products as inferior when you undercharge your goods. This is not the right view you would want your customers to have about your products or services.
12) Proper Documentation
Most first time entrepreneurs are fond of going into business with friends, family, spouses and even complete strangers.
As humans, conflicts would always arise and the absence of a legal document explaining the rights and responsibilities of every partner, be it during the course of liquidation or the profit and sharing ratio would make it difficult to operate the business effectively.
Protecting your financial interest is imperative, so always get proper documentation when venturing into any form of partnership.
The explanation outside the dictionary meaning could be difficult but resilience is an element that is so important in business.
Sometimes things will get difficult in business as in everything in life, when this happens persistence might just be the ingredient required. Some people refer to this as creating your own luck.
Don’t give into the difficulties. Persevere.
14) Striving For An Upgrade
Always look for ways to improve your products and services continuously. Upgrading your business leads to high quality goods and services leading to an increase in the customer base and fanning out your competitors.
Ultimately, save tightly and spend wisely!
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