Today's guest post comes from John Quinton. John is a marketer in the U.K. that has helped and witnessed many businesses fail (and many businesses succeed as well). Through his experiences, he has come to realize that most of the stories are similar through a few common principles. That is why he has been kind of enough to send over a short list of common business mistakes that are often overlooked.
The statistics of a new business failing are pretty scary, with an extremely high rate of business going broke within the first year of trading. However, simple yet obvious mistakes are very commonly the cause of such failings, and can be easily avoided with some basic planning and preparation before you set off on your journey.
I firmly believe that your business battles are either won or lost before you start, in the first research stages. Before you start you should know exactly what you need to spend, what the market looks like, how much you stand to risk and how big that risk is. Some people thrive on a bit of risk, but business should never be a blind gamble, it should be carefully calculated. This post goes through a list of five of the most common, yet obvious mistakes I see regularly.
Never Getting The Idea Right
Having a great idea for a new business is exciting stuff, but many people fall into the trap of getting too wrapped up and not considering if the idea one that is needed, or can actually make any money. It’s at this very first stage that you should be thinking and tweaking your idea making sure it can be monetized and will be in demand. Go for something too original and you could be too far out, or go for something too ‘normal’ and you could never escape the competition.
Bad Market Research
It’s amazing how many people either skip this stage entirely, or just do a quick job without making full use of the information they gather. It’s here that you need to really critique your new business idea. Listen to what people say and don’t ever assume you know more than your target audience. They are the ones who will be able to accurately tell you how much they are willing to pay. Also take time to look at your competition and see if you can spot any gaps, what can you do better?
Not Fully Knowing How to Sell Your Product/Idea
Whether you are selling your product /service online or from a physical address, it’s vital that you research and look into the costs and potential customer base properly. For example, e-commerce stores usually have a conversion rate (hits to sales) of around 1-2%, with the best stores achieving 4-5%. Is that factored into your budget and have you got a good idea of how you can work on and increase these numbers? The same principals apply for physical locations. Get to know the world you’ll be operating in.
When budgeting and projecting costs do all that you can not to pluck numbers from the sky. There’s always a way in which you can accurately predict what you may or may not be able to make. Always know what each product or item will earn you in terms of profit, and make sure you think of everything when adding up costs. Be as detailed as you can detailing costs from advertising right through to electricity and rates.
Getting Stuck In A Rut
This can be a really hard mistake to avoid. It’s notoriously hard to spot obvious problems when you yourself are stuck in the middle of it all. Having the help of friends and family to give you feedback is one way of always staying in touch with the reality of your business from an outsider’s point of view. Or similarly, ask customer’s for feedback, after all they’re always right....right?! Having quarterly reviews of your business can be a very productive process and you should never be afraid to make changes.
Jon Quinton works at helping people promote and improve their businesses online and is currently working for Ian Allan Motors in the UK.