Let’s be realistic, every business makes mistakes. The pro-active way to deal with them is to acknowledge them quickly and do your best to make sure they are not repeated. As any bona fide business owner would say, mistakes will happen, it’s how you deal with them that counts. Now with that nugget of information out of the way, let’s get down to the aspects of business that require the most due care and attention.
1 – Due diligence
If you think an aspect of the business is going to fail, fail it quickly. Every business owner makes mistakes so all you can do is make sure you identify and analyse what went wrong and do your best to not repeat it. Unfortunately, identifying a potential problem can result in an idea or area of the business closing down, but it’s better to fail early than to draw it out and risk your capital.
Once business is under-way, you’re going to be enthused by new markets and demographics to tap into, but remember to keep focus on your core business model. Being tempted by early diversification increases the risk of business, especially if you’re a start-up at it’s most vulnerable.
2 – Understand the value of networking
If you have trouble creating certain legal documentation or need to source another warehouse for your product, can you do it quickly? Frequently, business owners have had to put their company on hold while they start finding those who can help them again. Having a varied and wide source of contacts before taking the plunge means that you are flexible enough to diversify when needed.
3 – Market research
Market research is key to identifying if your idea has an audience. This ties in well with deciding who to let your business idea known to. If there is a potential audience, ask them what their needs are in relation to your product and share your idea with them. Tell new customers what your plan is and use a non-disclosure agreement if need be. When telling others about your idea think about what you specialise in, don’t just be another web company for example. Does your business partner have a particular flair for creating unique and illustrative websites? If so can you make it a selling point?
If you have trouble identifying your market place, use freely available resources such as government data or your own industry contacts that provide a similar service.
4 – Failing to plan is planning to fail?
Situations can arise that affect your business but are largely out of your control so consider a contingency plan. If there are transport strikes or political instability in your area, can it cause sales to drop? Does your business make enough profit to make up for periods where sales may drop and it needs to survive on cash reserves alone.
Create a quality business plan that lays out such future events and their potential as a risk to business. Be realistic with projections. Make sure your plan helps to decide how many people to recruit, what equipment is necessary and what predictions are for cash flow. Over-estimating the market size for a new venture is a common but easy mistake to make.
5 – Monitoring the competition
Get a clue about your competitors by looking at their advertising, press releases and any exhibitions they go to. Don’t get too entrenched in how much competition there is or what they do as it may deter you from creating profit where there is still plenty of scope to be made.
6 – Hiring and firing the wrong people
A large part of your success is determined by the quality of people you recruit. There are plenty of options for recruiting based on your structure and profit margins. How many staff do you need full or part-time? Can you get in temporary staff or do you require the flexibility but higher cost of a freelancer or consultant. Staff also determine how your business is perceived by the outside world when it comes to client interaction and promoting yourself.
You’re not immune, embrace it
Even when being aware of all the common mistakes that a business can make, don’t believe you’re immune. Even with the most popular blunders, there is usually a tiny detail overlooked, that caused them to happen.
Don’t think that failing at one aspect of your business means the end though. Unless there is a significant risk to your capital, many ventures have good success with a clear understanding of the industry and how to thrive within it. Once you’ve achieved that, it’s time to start reaching for the skies!