Common Mistakes New Business Owners Make
By Susan Bagyura
Starting a business can be quite risky and of course success is not guaranteed. The majority of new businesses are most vulnerable during the first 3 years with statistics citinga failure rate of 85% worldwide. Even though that might sound rather gloomy; it’s also important to understand that the small business sectors historically created the greatest growth, more job opportunities and account for 80-90% of all business. Small business is the backbone of all economies.
Therefore, it’s important to understand where many businesses go wrong so you can improve your chances of success by avoiding these common blunders:
1. Poor or inadequate market research
It’s vital that you have a viable idea with a competitive price that provides an adequate return (price vs. value). It’s easy to get so excited about an idea and think that everyone will just buy it, but it would be a serious and costly mistake to overlook doing market research. The more you know about your market, the greater your confidence will be in your approach to it. Be like a detective and dig deep to fully understand your market’s motivation or interest in your product/service.
2. Weak financial planning
Although there are stories of people starting a business with little or no money, having sufficient capital is essential for the survival and prosperity of a business. Invest time in understanding what your running costs will be for at least 12 months; including your personal costs. Include a contingency plan for some situations that could impact your business. While a business can survive periods where there are no sales or profits, it cannot survive without cash.
3. Focuses on sales instead of profit
Many new businesses make the error of focusing too much on growing the sales volume or size rather than the profit. It’s crucial to understand what your costs, expenses and profit ratios are for each product/service along with what happens to the profit if you discount the price for large orders. Further overtrading can occur when a business takes on more orders than it can support with its working capital and current assets.
4. Taking your eye off the competition
Failing to monitor your marketplace will stop you from seeing what competition or threats exist that could impact your business. As a business owner, it’s imperative to be looking for ways to help your customers improve and reach their goals. Find out what exhibitions or trade fairs your customers go to and attend them as well.
5. Setting up poor credit arrangements
Carry out credit checks with potential new customers. It can be devastating to leave your business exposed to delayed or non-payment; particularly if you cannot pay your suppliers or bank on time. Make certain that new customers are aware of your credit terms. Consider offer a discount for early or pre-payments.
Susan Bagyura guides women through their fears, doubts and don’t-know-how-to’s of starting a business to successfully and confidently owning their first business.

Author's Bio: 

Susan Bagyura guides women entrepreneurs through their worries, fears and don’t-know-to’s of confidently starting and growing successful businesses and how to own a business.