Part 1: Starting up a New Business?

Starting up a new business

Common mistakes and how to avoid them

If there’s one thing the British business community has in bundles it’s entrepreneurial spirit. Encouraging a great idea from its kitchen table origins right through to its transformation into a real profit-making business is what we’re known for. 

At Clever Business Websites, we believe small businesses are the backbone of our economic landscape. So to help any budding entrepreneurs along the way, we’ve put together a short guide to the common pitfalls start-up businesses face – and tips for how to avoid them.

1. Not doing your research!

This is a key problem area for new businesses as you can get carried away thinking that your idea is great without testing its market viability. It’s worth spending time carrying out some in-depth market research on what your customer needs are, testing out products and factoring in feedback so that improvements can be made before launching. Know your marketplace and this will serve you in good stead!

2. Poor planning

You need enough capital for your business to survive and for it to prosper. It’s probably the most important indicator of your business’ health. Not having sufficient capital, or putting together a financial contingency plan, can bring down a new business quickly. To stop this in its tracks, focus on creating a high quality business plan to attract secure funding. Build into your plan solid contingency measures so you can ride out any waves of market uncertainty. Remember that sound professional advice is readily available to help you at this stage.

3. Don’t set your sights too high

So you’ve got a great idea, you’ve done your market research and part of your business plan needs to build in forecasts to persuade the bank to lend you the money. Before you set wildly optimistic projections, stop and think about the realistic potential for your business. Inaccurate forecasting is common among start-ups, with the consequence that you’ll have depleting cash reserves and be buying unnecessary equipment. Focus on your profit levels, not sales volumes, when planning cashflow and income projections. In this way you can avoid setting your sights too high.

4. Taking your eye off the competition

Being market-ready when you launch your business is vital and so is knowing what your competitors are doing. Small details can be all-engrossing when you’re in the start-up phase, but you also need to respond to competitor activity within your marketplace. Don’t forget that competition doesn’t just mean a similar business to yours but also another product/service in development which you ought to be selling. Monitor your competitors through advertising, press, trade fairs, web searches and promotional material – feed any knowledge you gain into your marketing plan.

5. Hiring the wrong people

Your business will thrive on having the right staff, those that you can rely on and who will contribute to its success. Start-up businesses often use family and friends to solve staffing issues, but they might not have the right mix of skills to get the job done efficiently. Hiring good staff is a form of investment and needs careful consideration. Get it right and your investment will reap dividends!

6. Failing to ask for help

Be un-British and lose the stiff upper lip! It’s surprising how few people starting a business actually ask for help. There are many professional advisors available who willingly offer (free) advice to help your business get launched. If you can avoid the mistakes that others have made, then jump at the chance. It can sometimes be a lonely place being an entrepreneur, so the more you can talk about your challenges, the more opportunities will arise to counteract them. 

 

Image credit - freepik

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