Mehul Rajput, CEO of app development firm?Mindinventory, returns to guide readers through some of the most common new business mistakes made by entrepreneurs when starting out.
What is done is done.Do not repent, you cannot undo. Be careful not to do the same thing again. In all our actions, errors and mistakes are our only teachers.
How emphatically and beautifully did SwamI Vivekananda summarise the definition of mistakes? We all commit mistakes, especially if we are doing’something for the first time. You can even expect the same in the business arena, because during the time of inception an entrepreneur is mostly inexperienced. He is bound to commit some faults in the beginning, which will serve as a learning curve as he moves further in his venture.
According to Forbes, 90 per cent of startups fail because their founders do not possess the business acumen to lead it forward. They fail to meet the stern competition and as an outcome, suffer huge losses. One needs to have a sound knowledge of the market demands and how to launch a new product with a boom.
Eight new business mistakes to avoid
Failing to conduct market research
One of the most effective mantras for establishing a new business is conducting thorough market research before penetrating into the arena. Any business is based on wide range of ideas, strategies, marketing principals, legal disciplines and other vital resources.
But, have you ever wondered where these essential tools generate from? Why some of the companies and big entrepreneurs have become giant players of the market? it’s because they go for the market research at regular intervals, even if they are aware of the nerves of their predominant customers.
Not conducting proper market research will land your business into trouble. You will not be able to get answers to core questions around the concept of service or product, access to risk management, the changing scenario of audience’s demands, upgraded tools and technology for improving organisational skills or be able to define your budget.
The Harvard Business Review states that most business fall flat soon after their launch as they don’t give priority to market research.
A shortage of capital and other resources
Previous research conducted by CB Insights showed that one out of every three businesses fail to make a mark because of inappropriate funds or they run out of cash. You have to understand the meaning of cash flow right from outset.
Cash flow is the amount which is flowing out of the business. As such there are two types of cash flow: positive and negative.
Positive cash flow is a healthy indication that the company’s liquid assets are increasing and the money coming in exceeds the outgoing cash. On the other hand, negative cash flow means the outgoing money is exceeding the incoming cash into the business.
Novice entrepreneurs often don’t have adequate knowledge on how to sufficiently manage the funds and they keep on squandering the capital aimlessly.
Not doing the SWOT analysis
In today’s dictionary, SWOT (strength, weakness, opportunity, threat) is no longer an alien term or just predefined to students of management. It is because this phenomena of success is not restricted to business, but can be applied to life. For a new founder, SWOT analysis becomes all the more important.
Failure to consider the SWOT analysis means failing to be aware of the various threats that are laying forward. You have to change your attitude if you want to stay alive in the race.
Starting a business just for the sake of launching
It has also been seen that some entrepreneurs start a new business because they want to, but in reality are not very serious about it. Such businesses are bound to suffer sooner or later because they lack planning.
It is obvious that starting a business is not just an overnight process. You need to have an idea about what products or services you are willing to release in the market. Entering intoa vast market arena without proper planning or strategy is like writing an examination paper without any preparation.
Having an inactive partner or hiring ineligible people
First-time business owners often fail because they don’t hire the right kind of people who can think innovatively and help to run the company seamlessly.
In a partnership business, if one partner remains inactive and shows no keen interest in taking the business proposals forward, , the entire burden of administering the policies falls on one person. In that case, how can you expect to be successful?
Not identifying the target audience
This is again a part of the planning procedure you must identify who your potential customers are. If you launch the same product for everyone in the market, your business will suffer.
If you read the success story of giants like Microsoft, Facebook or Apple, you would know that even they had their target audiences. For instance, Mark Zukerberg targeted mainly the college youngsters in the beginning, while Apple and Microsoft focused on tech geeks.
Not advertising or promoting the product or services
Advertising becomes the backbone for every business to survive in the long run. According to HubSpot, there are various marketing strategies for promoting your business. This is based on the search engine optimization (SEO) statistics that include conversion rate optimisation, local SEO, organic search, promotion through social media platforms, blogging and so on.
The bottom line is that you should utilise all these tools to maximize your gains. If you are not able to advertise or promote your business to reach the customers, then nobody but you yourself is to blame.
Other reasons for failure
There can be other reasons why new entrepreneurs struggle. One of them is that they just confine the ideas to themselves and not share with anyone. Secondly, at times they tend to lose their focus. They may also become perplexed and during the process can take a wrong decision. Lastly, they can be overpowered by negative thoughts and this is a big flaw on their part.
We all are aware that starting a new business is not that easy. You will commit the mistakes, but then later learn from it. That is where the experience will come from. Moreover, it is good to have some knowledge of the road before commencing the journey. If you avoid these mistakes and are careful in your approach, you can set an example for the others to follow.
Mehul Rajput is CEO of Mindinventory, a mobile app development company specialising in android and iOS app developmentRead more of the top small business mistakes made by new founders