Fatal Mistakes New Business Owners Make – Part 1
We’re in a time in history in which everyone and their mother wants to start a business. Startup culture has really taken over and everyone wants to get in on it. Though it’s great that so many people want to explore their more entrepreneurial side, it’s also worrisome that a lot of people, often with no previous knowledge, are putting money and time into new and fragile businesses. See, when making your own business, there’s a lot in the line. A lot of times, you’re using your life savings, and have a limited timeline for it to work before you have to go back to being someone else’s employee. That’s why you need to be aware of the most common fatal mistakes, and learn how to avoid them:
Jumping Right In
Having the drive to go after your dreams, is great, but letting that drive make all your decisions? Not so much. A business needs to go through a planning stage. You need to make a budget, list out your resources and generally plan even the smallest of details before you go in.
Forgoing Market Research
You wouldn’t cross the street without looking both sides first, why would you jump into a market without looking first? Market research is key to avoid major accidents, mishaps, or wasted money. Most people hear market research and immediately think of a word document outlining competitors and offering a cursory understanding of the market they are already a part of, and, honestly, that would be a pretty useless document. The thing is, a good market research goes well beyond that.
For starters, it will offer an understanding of the target audience with their pain points and interest, a thorough benchmark, and a deep understanding of the opportunities and weaknesses of the business itself. All in the interest of finding new business opportunities and offering a clear view of what may be ahead. So, naturally, deciding to forgo the market research and just dive right in, will be like skydiving without a parachute. There’s only a slim chance that things will work out.
Not Knowing the Value of Your Product
Estimating the cost of a product is a matter of numbers, knowing the value of a product is about understanding the people who need it and how much they need it in their lives. Thinking value and cost are the same thing is the safest way to wasting a lot of time adjusting prices and developing a useless business model. Before going out into the world or figuring out production costs, you should know exactly how valuable it is for your customers. Having an idea of how much they’re willing to pay will help you plan out your productions cost and assess how much of a profit you can potentially make. Also, it will make things easier for your marketing department down the road.
Naturally, this isn’t all there is. There are other mistakes that newcomers make and end up being a death sentence for the new business. If you don’t want to be part of those who couldn’t make it work, stay tuned for part 2 of this list.