Half of all new business start ups will fail within three years. Some of these failures can be put down to uncontrollable events such as market crashes and recession but many can be blamed on the business owners themselves making poor decisions. Many of these mistakes can be avoided through careful planning and execution.
Here’s a list of five mistakes that are often made by new business owners:
Lack of research
Market research is key when it comes to planning a new start up. Is your business idea sound and does it fill a gap in the market? Is your pricing competitive and will you be able to make enough profit? It is easy to get caught up in a great business idea and get carried away without carrying out enough research. Make sure that as well as this you are making separate plans for finances and marketing.
Setting unachievable goals
Along with poor planning, setting goals that are too ambitious is often another cause of failure. Buying equipment or services that are not yet needed by your business and hiring too many employees is going to cost a lot of money and as a fledgling company it could prove difficult to support these costs. Even if you do end up needing the resources later on it is best to wait until you can afford to get them rather than stretching an already tight budget.
Hiring the wrong staff
Hiring the wrong people or not hiring anyone and trying to do all of the work yourself is a sure fire way to fail. You might think that it would be great to hire your friends and family to help out but if their skills don’t meet the needs of your business then it is going to be very difficult to move forward. Doing everything yourself can be equally bad for business. As you stretch yourself by trying to do all of the jobs within a start up, you can end up burning out, losing interest and ultimately giving up. So do get help when you need it.
Not monitoring the competition
The competition is not only likely to take business away from you if you don’t keep an eye on them. It can also be a good learning tool. Look at what your competitors are doing differently to you. Are they doing things better? Could you improve upon their services? Don’t let the competition sneak up on you and take all of your profits.
Perfection
Every new business owner wants their business to be perfect but it can have detrimental effects if you always strive for perfection. The more time and money you spend on developing products is time lost in making money from them so get a product or service out as soon as it is viable. You can always make adjustments as you go
There are many more things to consider when it comes to starting a new business but avoiding the mistakes above can go a long way in making sure your business is a successful one and not doomed to failure.
If you’re considering setting up a new business why not take a look at our company formation packages?
