The digital age has provided a greater avenue for the average person to start a business. It is now easier to establish and market oneself than ever before. Social media and various other e-commerce platforms, have provided fertile land for a determined individual with a good idea.
However, starting a business remains a big change which one should be prepared for. According to the Telegraph, 20% of start-up businesses fail in their first year. Whilst 60% going under in the first three. These tips will equip you with the necessary tools to avoid the pitfalls which business can pose.
5) Planning/ strategy
‘‘Failure to prepare, is preparing to fail’-Benjamin Franklin
Lack of planning is a sure way to run anything into the ground. In commerce, there must be strategies in place to ensure fluidity, whether it be the running of a service or the creation and distribution of a product. Businesses are built upon goals both long and short term. Having a vision for a company is essential to staying afloat, especially in formative years when operations may not be as easy.
Planning also includes testing your products. For example, Theranos was a Silicon Valley biotech start-up company which failed. Why? Theranos set out to create a revolutionary blood testing machine which did not work
It is imperative that all your proverbial boxes are ticked.
4) Poor marketing
‘‘Content is King, but engagement is queen and the lady rules the house!’’-Mari smith
Having the product is key, but what use it if no one knows about it? Marketing is essential to having a successful business. Leading digital marketing agency Marketingsignals.com stated that 90% of UK start-ups fail within 120 days. Out of this 37% can be attributed to a lack of digital marketing/ online presence (Let that sink in).
Consumers need to know that a product is of value and appeals to their interests. A marketing blueprint must exist which can include: Digital marketing e.g. social media and direct marketing e.g. tele marketing, public relations, coupled with a growth plan to ensure its sustainability. The modern entrepreneur must know how to grab consumers attention and keep it, as the pace of the business world accelerates daily.
‘‘A budget is telling your money where to go instead of wondering where it went’’-Dave Ramsey
It is commonly known that you must spend money in order to make money, though having a plan for your capital and expenses is vital for a start-up business. Financial planning will help to shape the goals and vision for a business before it starts. By doing the necessary groundwork, one can avoid the pitfalls of debt through overspending. Conversely under spending could lead to poor product quality and or missing out on beneficial marketing opportunities.
‘The weakness of an enemy forms part of your own strength.’- Sun Tzu
A key pitfall many businesses make is not assessing the market they are entering. Modern entrepreneurs must know who their competitors are, in doing so they can evaluate the probability of success.
Failure to do so could end up in wasted time and capital, resources which could have been allocated better if proper research was undertaken. For instance, it would be unwise for a start-up business to join the same market as a well-established firm such as Amazon, as it essentially has a monopoly in e-commerce.
1) Single leadership
‘If you want to go fast, go alone. If you want to go far, go together.’ — African Proverb
Matt Pyke (Founder and CEO of Fly High media) said “As a start-up, there is sometimes a lack of self-awareness. Founders in the early stage are not great at delegating work to their team members. They try to do everything that they possibly can to cut costs”.
There will be the temptation to micromanage at the start of a business; A natural emotion as the entrepreneur has put time and effort into the brand. However, this can lead to inefficiency and stress, two factors which will prove detrimental in the long run.
Instead an entrepreneur must learn to break up tasks and incorporate a trustworthy team who can aid them to reach their goal. Remember Mark Zuckerberg may be the face of Facebook, but he had the like of Eduardo Saverin, Andrew McCollum, Dustin Moskovitz and Chris Hughes alongside him in the beginning.
There a probably a million reasons why a business can fail but also a million reasons for the alternative. However, if the points above are implemented one can rest assured that they have taken care of the basics. The rest is up to a sprinkle of luck and timing.