While there are several ways to make a new small business successful, there really is only one way to do it right. That would be to follow the tried and true guidelines that have been set forth by the millions of successful entrepreneurs who have already succeeded.
As you set forth to start your new business, you would be best served to follow the aforementioned guidelines. This would be the surest way for you to position yourself for success.
Remember, you have to worry about two things. First, you need to concern yourself with doing things the right way. Second, you need to simultaneously avoid making the same mistakes that seem to destroy far too many businesses before they can really get traction.
In an effort to help you avoid making common mistakes made by wayward entrepreneurs, here are eight mistakes you want to avoid at all costs.
1. Not Investing Future Financial Resources
With a limited amount of available capital, it doesn’t make sense to simply run out and spend it all upfront. A far better option would be to set aside a portion of the capital for future expenditures. An annuity could be the perfect investment option for future savings. After making contractural payments to an insurance company for the annuity, the funds are guaranteed along with a small percentage of earnings.
When the funds are needed in the future, the insurance company would be obligated to make said payments as prescribed by the annuity contract.
2. Making Unwise Investments
Again, limited financial resources dictate that those funds be used wisely. As an entrepreneur, you need to grasp the concept of opportunity costs. If you invest in one thing, it will keep you from investing in something else. If your new company needs marketing material on the internet, does it make sense to invest much-needed capital in new office space? Limited funds must be spent wisely.
3. Location, Location, Location
The number one reason why small businesses succeed or fail is location, location, location. You have to pay attention to where you locate your brick-and-mortar business. Before spending money on the facility, you must consider the feasibility of the location. Otherwise, you end up spending a lot of money setting up the facility only to have customers be a no-show.
The most important question you need to consider is, “can your target customer base easily find and reach your business?”
4. Timing of Staffing
When an entrepreneur allows themselves to get too excited about getting their business rolling, they often start hiring people too soon. This is dangerous for a new business because employee costs can create a substantial financial burden. What drives a lot of entrepreneurs to hire too soon is the feeling of being overwhelmed.
If you need help early, you might want to consider hiring a temp as opposed to going all-in on hiring employees with all of those extra employee costs to carry.
5. Not Understanding Target Customer Base
When you start investing in your marketing efforts, you will need to carefully watch your marketing budget. You will want to make sure that you are marketing to the right customer base.
It’s not enough to simply produce a product and offer it to the general public for sale. You had better have a good idea of who is actually going to want or need your product. Otherwise, your marketing budget will go to waste chasing the wrong customers.
6. Lack of Focus on Marketing
A lot of new entrepreneurs get caught up in the idea their new product or service is going to solve problems. What they neglect to do is allocate enough financial resources to marketing efforts. You need to understand that having a great product only matters if the right people know about it.
Do not underestimate the value of a good marketing campaign as you are trying to get your business off the ground.
7. Lack of Focus on Building Good Company Structure
A business is only as strong as the people running it. That includes everyone from the entrepreneur to the person answering phones. It’s very important that you build a company culture and structure where all of your employees fit in nicely. When people can work well together, productivity levels will go through the roof.
When things don’t run smoothly, business interruptions are likely, which will eventually adversely impact the bottom line of the business.
8. Avoiding Contracts
Far too many new entrepreneurs are afraid to enter into contracts, agreements, and financial obligations. The fact is there is value in having structure. A new business should not be wary of contracts and agreements. They should in fact embrace them.
If employees are given an agreement or contract, everyone is able to set expectations without any ambiguity. The same idea applies to business partnerships and customer contracts. Signed contracts and agreements offer protections to all vested parties.
In the beginning, a new business will benefit by making sure they have all of the protections they can possibly get.