A journey from rags-to-riches is not always easy. Like a roller-coaster, running a business has its ups and downs.
If you’re a business-owner, it goes without saying that it will not always run smoothly. Adequate preparation can minimise the issues you may face, but many entrepreneurs still face issues through making key mistakes – some of which can be fatal.
Cited from Inc, let’s check out the seven common mistakes that new entrepreneurs make – so hopefully you can avoid them.
1. Not performing market research
Commonly, new entrepreneurs are so overconfident that their products will become a best-seller without even doing the proper market research. The result is very much expected: no one buys the product, unsold stock piles up, employee salaries cannot be paid and the business goes bankrupt. Instead of making money, the funds invested goes to waste and even worse, they often have to find more money to cover the bankruptcy.
In order to avoid this, you have to find out if your products are really going to catch the eye of the consumer and perhaps even more importantly, understanding your competition. From there, you can access the real demand of your products.
2. Did not know the target market
This is another basic but common mistake amongst new entrepreneurs. If they were asked who their target market is, they only answer that everyone is their target. Having a small target market isn’t always a bad thing – understanding the specific needs of a group of people is exactly what you need in order to get them to buy into what you’re selling.
On the whole, it’s better to have a segmented market. By having segmenting your market, you can develop and implement an effective marketing strategy that covers off all of your customers holistically even though they might have very different needs.
3. Not fully exploiting your network
So many entrepreneurs do not realize that their own contacts can become a potential target market. This can include family, friends, or even colleagues. You already have a relationship with these people, so selling your products can arguably be achieved with greater ease.
So, keep in mind that your own existing network could have valuable potential – especially in the early stages of establishing your business.
4. Not treating sales as a focus
It might seem crazy, but some new entrepreneurs don’t always apply the level of focus they should on their sales. As a new business-owner, you have a lot to do, and you can easily get caught up ensuring that your brand looks enticing and that your office is a cool space to work in. But ultimately, these things are not what you should be focusing on. It’s simple: no sales, no money. No money, no business.
5. Setting price too low
In order to first enter the market, new entrepreneurs usually set a price that is too low for their products. Whilst a lower price can entice someone to try your product or service when they have never previously heard of it, you can run the risk of conditioning your customer to only paying an extremely low price for what you’re selling. Often, this is not sustainable, so be careful. It’s really important that you do the math before committing to this pricing tactic.
6. Focusing on revenue instead of profit
Being mindful of your revenue is necessary, but the most important is your net profit. It’s the net profit that ensures your business is sustainable, but more than that, it’s what you can use to help you grow.
7. Not tracking expenses
Obviously, tracking expenses is absolutely critical as you can unconsciously spend your capital without even realizing how much you’re parting with. Only spend on what you know will result in profit.
No doubt, there will be circumstances where you encounter an expense you didn’t plan for. Unplanned expenses are exactly that – unplanned. However, you should set aside some emergency funds for this exact reason.
So there you have it – these are some of the simple, yet surprisingly common business mistakes that people make. The important thing to remember is that they’re all avoidable – and now that you know what they are, you won’t fall into the trap of making them.