Life as an entrepreneur is always a learning process, and you won’t grow without taking risks. Sometimes, you need to trust your judgement, but there are some mistakes you can avoid altogether. Here are 10 common mistakes you need to avoid.
1 Lack of planning
Don’t neglect to provide a detailed business plan showing your projected outgoings and earnings. You may have a great idea, but this is not a business plan. Investors may be intrigued by your ideas, but they will want cold, hard evidence of their viability.
2 Badly targeted marketing
Make sure you’re specific when advertising. Know what your unique selling proposition is and target a specific market rather than trying to be all things to everyone. There are hundreds of, say, interior decorators, but if you have a speciality in, perhaps, decorative paint effects, use it as a USP.
3 Wasted marketing spend
Don’t have hundreds of business cards and brochures printed. They go out of date very quickly and can be expensive to produce. If your contact details change, the cards and brochures need to be amended.
4 Poor recruitment
Be careful whom you hire. It may seem like a good idea to get friends or family involved in the early days, but if they don’t have the qualities you really need, it will impede your progress. Identify the mix of skills you need and look for people who can provide long-term value to the business.
5 Net losses
Avoid expensive websites and domain names. You could even try building your own business website using one of the popular DIY solutions, you might even know someone with more knowledge who could help you put together your own website. Don’t clutter up your website with information customers don’t really need to know about. Instead, tell them how you can solve their problems or provide them with things they need or want.
6 Inadequate research
Don’t neglect planning and research. These are vital in ensuring the viability of your business idea, and a frequent cause of failure is not spending enough time finding out whether there is genuine demand for what you sell. Your pricing must be competitive and capable of providing a viable return.
7 Unrealistic assumptions
Try not to set your sights too high, because inaccurate forecasting of market size is a common mistake for start-ups. You will need reliable cashflow and income projections to avoid expensive mistakes such as over-staffing, purchase of unnecessary equipment and lavish business premises.
8 Overtrading and overpromising
Beware of the dangers of over-trading, which happens when you take on more orders than you can comfortably fulfil, or that can be supported by working capital and net current assets.
9 Poor stock control
Make sure you have good practices to avoid tying up your capital as a result of poor stock control. Efficiency here means you have the right amount of stock in the right place at the right time – instead of the chaotic opposite.
10 Ignoring the competition
Never take your eyes off the competition. You’ll need to respond to your competitors continually, so you need to remain aware of what they’re up to. To wrongfoot them, you could introduce new products or services. Always try to outperform your competitors. Find ways to be more special that they are.
Have you got any tips to add or any stories to share? We’d love to know what you think…
Liz Madden works for Champion Accountants