Did you know that, on average 60% of new start-up businesses fail in the first 12 months? Most of the time, these failures can be attributed to a small number of mistakes that business owners make in the early days.
So, to help all you new entrepreneurs out there, we thought it would be a good idea to highlight these common mistakes, so you know what to look out for as you start out on your journey to financial freedom.
1. Fail to Plan, Plan to fail
Yes, we know it’s an old one, but it’s also the one mistake that is responsible for the downfall of so many promising young businesses.
If you don’t have a plan, how can you expect the business to succeed?
The first step is to decide on your goal or target. Once you know where you want to go, you can then decide how you are going to get there, which forms the basis of your plan. With a detailed plan in place your chance of success improves greatly.
Step two is simple. Follow the plan! Many people plan their business down to the smallest details and then completely forget the plan they’ve written. Don’t let this happen – make a conscious decision to consult and adjust your plan regularly to assess your progress.
ACTION: Read our blog post on creating your marketing plan
2. Not having a Unique Selling Proposition (USP)
USP was defined by advertising executive Rosser Reeves like this…
‘Each advertisement must make a proposition to the consumer; it must say to each reader: ‘Buy this product and you will get this specific benefit.’
The proposition must be one that the competition either cannot, or does not, offer. It must be unique-either a uniqueness of the brand or a claim not otherwise made in that particular field of advertising.
— Reeves, 1961
To simplify this, your USP is the answer to this question: “why should I buy from you rather than someone else?”
Imagine a customer asking you this question face-to-face? If you struggle to answer, or find yourself saying “we’re cheaper” or “we offer a better service” then you don’t have a proper USP.
If you are a small business relying on price to differentiate yourself from your competitors, then your customers have no loyalty to you (they just want the cheapest price) and your business will ultimately fail. Instead, give your customers a reason to buy from you that they can’t find anywhere else.
Want to know one of the most successful USPs in history? Remember this one from Dominoes Pizza?
“Fresh, hot pizza delivered to your door in 30 minutes or less—or it’s free.”
It promises the customer the benefit they’re going to get (fresh, hot pizza) and sets a timeframe (within 30 minutes or less) and also gives a guarantee (or it’s free).
ACTION: Read our full guide on developing your USP and positioning your business.
3. Failing to manage your Cash Flow
Cash flow is the biggest killer of small businesses. Being able to forecast where there is a short fall in advance and then putting a plan into place to avoid this (delay supplier payments, offer discounts to customers for early payment, ask bank for additional help – overdraft, loan etc), can really be the difference between survival and insolvency.
At the outset businesses will need a certain amount of funding in order to survive long enough to reach the critical breakeven point. Without calculating your cash flow forecast from the start, how do you know whether there will be sufficient money to keep the business going?
ACTION: Read do you know your breakeven point on our blog.
4. Not doing Market Research
You might think your product or service is amazing, but will your target market feel the same? Do you have any evidence that they even want or need what you are offering?
Building a business based on what you think people want is dangerous, so take some time to conduct proper market research and you’ll save yourself a lot of time, money and heartache in the long run.
5. Not investing in Marketing
When you’re starting out you need to make sure you have set aside a budget to promote your business. Too often we see new businesses that have made no allocation in their budget for marketing costs – website design, advertising, SEO, business networking, social media etc.
Without the right marketing in place, it’s unlikely that your target market will know about your product or service.
A common complaint we hear is “I have a great website, why is the phone not ringing?”. Normally, it’s because they’ve spent their entire budget on the website and then can’t afford to spend money on marketing to drive visitors to the website. Unfortunately, just because you’ve built a nice looking website, it doesn’t mean people will find it!
ACTION: Read our informative guides:
1. How to Identify your target market
2. How to create a USP and position your business
3. How to set the price of your product / service
4. How to promote your business – brand awareness vs. direct response
5. How to advertise your business – online and offline
6. How to use the AIDA model to create a successful advert for your business
6. Trying to do everything yourself
Most business owners fall into the trap of trying to do everything in their business; from the strategic business critical tasks right down to the basics like filing receipts or paying in cheques. Wasting your time on the simple tasks that someone else can do is a mistake. Your time should be used wisely on the important tasks that can make the biggest difference to your business.
Start today by delegating the simple time-consuming tasks to your staff or a virtual PA so you can free up your time to do the important, business-critical tasks.
Another good way to use your time efficiently is to keep your books and records online. Using online software, such as our very own portal, can save time, reduce clutter and give you the important key information and numbers that you need in order to make vital decisions.
So there they are; our top six start-up mistakes. Avoid them and you’ll prosper, ignore them and you’ll struggle. The choice is yours…
Download our free ‘7 Day Guide to Starting your Business‘ now, it’s packed full of useful advice and guidance on what you need to do to get your business off the ground and how to do it!