Starting a business can be an exciting time as you create your concept, organize your financing and anxiously await the day your doors open for business. But the sobering fact is that 96 percent of all businesses fail within the first 10 years, according to Inc., which is why you must make a smart decision on the type of business you start. If you’re looking to start a business, following are some pitfalls you need to avoid to increase your chances of success.
Entrepreneurs often make one of two mistakes regarding their competitors. They either fail to consider them direct competitors or start chasing their every move. In reality, you must correctly identify all competitors who will impact your business and know their strengths and weaknesses versus your own company. You should also anticipate potential challenges you may face against them, even if they service a different segment. Top fast food restaurants, for example, now account for the increasing demand of fast casual dining when for years they only nominally competed against casual dining eateries. Contrarily, entrepreneurs can make the mistake of chasing competitors when it isn’t wise to do so. Instead, determine your core competencies versus major competitors and highlight those in your advertising and promotions.
Lack of Customer Input
A fledgling business that doesn’t regard customer input isn’t going to stay in business very long. The best way to garner input from customers is through marketing research. Develop a questionnaire and conduct your research on an ongoing basis. Ask customers to rate various aspects of your offerings with respect to quality, customer service, professionalism and timeliness in resolving problems. Prod consumers what styles, flavors, sizes or variations they desire so you can keep track of their changing preferences. Use the customer data to tweak your offerings so you keep your customers happy. The best methodology (i.e. in-house, telephone or Internet surveys) for your research will vary depending on the type of business you own.
Overspending on Marketing Too Soon
Some entrepreneurs get too eager when starting out and throw too much money into their marketing. A couple areas of excess spending include hiring marketing personnel right away and overspending on advertising. Instead of fully staffing a marketing department, consider using freelance consultants who are experienced in the industry, according to Entrepreneur. This will save you on salary and medical insurance as you can hire people ad hoc if you desire. With respect to advertising, start with a few vehicles that will best reach your target audience, whether it’s via Internet, direct mail or social media. Measure the results of your ads so you know which ones generate the most responses. Once you know which ads are pulling, increase your expenditures with those sources to build sales.
Overlooking Established Franchises
Some entrepreneurs try to become too creative in reinventing the wheel, when investing in a profitable commercial business may be the answer. For example, if you’re starting a carpet cleaning business, consider investing with an established franchisor. Those who become affiliated with established companies usually enjoy much higher success rates, because franchisors offer extensive training that can help you avoid the common pitfalls of entrepreneurism. You will also benefit from the franchisor’s brand recognition and cooperative advertising. When you go with an established commercial business, you get a proven turnkey system that offers the highest potential earnings. And you can usually achieve your financial objectives faster than starting from scratch.
Use some of these suggestions to avoid common mistakes that befall most entrepreneurs. And consider the added benefits of becoming affiliated with an established commercial enterprise, even if your initial investment is higher. A well-known franchise can get you in profit quicker and improve your overall chances of success.