10 mistakes all new businesses should avoid

10 mistakes all new businesses should avoid

August 28, 2012 by Liz Madden

MistakeLife 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 They go out of date very quickly and can be expensive to produce.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

Comments

You don't need a good website full of quality marketing content to run a small business any more than you need an email address, bank account or accounting system.

But you are undeniably far better off with all of those things than without.

Completely agree with Amie on this. I develop websites and have marketing experience - the number of people who baulk at the cost of a website to be done properly only to then wonder why a DIY website created on an underoptimised free service with no knowledge of SEO, user psychology or adequate content writing abilities is astonishing.

Before the value of a business can be measured, the valuation assignment must specify the reason for and circumstances surrounding the business valuation. These are formally known as the business value standard and premise of value.

 

Some good points however the article seems to deter start ups from investing in credible marketing services from experienced design, web and marketing agencies. DIY websites are a false economy and make it hard for start up design and web agencies to compete. I agree start ups should be careful with budgets but my advice ,after setting up snd running a business for nearly 5 years, is to speak to people who have done it. You need a strong visual identity and getting business cards from vista print just says your cheap. If your serious about setting up a business then allocate a budget for marketing, if its not in your skillset then get expert advice. Don't dabble at things your not 100% sure about, I wouldn't try and do floristry if I were a car sales person so why try to design, develop, host and maintain a website when you've never done it before. Use your time to do what you do best.

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