The Number One Mistake That People Make When Starting a New Business
By June Campbell
Want to know the number one mistake that people make when starting a new business? You already know that many small businesses fail within five years of startup. In many cases, developing a good business plan before startup could have saved the day.
The number one cause of business failure is jumping in with both feet without developing a good business plan. A good business plan takes several weeks to research and write. It covers every angle of starting a new business, including market research, competitive analyses, pricing analyses and financial projections. Although this sounds like an overwhelming task when you first consider how much work it entails, once you get started, it falls into place. You chip away at the research bit by bit and eventually your plan is in place. You are way ahead of the game by having gone through this process. Furthermore, there are many guides available to take you through the steps of developing a business plan.
Remember the old saying, "If you fail to plan, you plan to fail.”
Without a business plan, you're in danger of falling in love with your business idea. Not that its a bad thing to fall in love with your business idea. In fact, if you don’t, you probably won’t have the drive to make it work. But as they say, love is blind. Your business strategy, like your choice of spouse, should not be based on blind love.
Blindly loving your business concept means coming up with a business idea and believing that it will succeed wildly simply because you think it is going to. You “know” that people need this thing. You “know” they will realize it is as wonderful as you think it is. You ‘know” they will break down the doors to buy this thing at almost any price you care to charge.
So based on this “knowing”, and without doing any serious market research, you set up shop and wait for the stampede which never arrives. It turns out people aren’t really that interested in your product or service. Maybe they're not interested at the price you are charging, but you can't make it or deliver it any cheaper. Or maybe they're not interested in the way you have packaged your product. Or maybe they don’t really want it in the first place. There’s a big difference between “needing” and “wanting.” Undoubtedly you know that your friends and family "need" certain things. The problem is they don’t “want” these things. Therefore, it doesn’t matter how much you think they need it. So it is with your customers.
Developing a good business plan will alleviate this all-too-common problem. When you do your market research and your analyses, you fully identify your target market. You determine if they are interested in this product, and how much they would be willing to pay for it. You find out how they want it packaged and delivered. You analyze your competition and develop strategies to be competitive. You analyze your numbers and find how to set your pricing so you can make a profit, and you find out whether your target market will pay this amount. If not, its back to the drawing board.
When developing your business plan, you also develop your strategy for marketing and promotion. You've encountered people who say, “I have this business or this online business set up, now how do I promote it?" That’s something to be determined during the planning stage, not after the business is created.
Spend the time now doing your planning and you’ll save yourself countless hours later on when you discover that things aren’t working. Discover the roadblocks now before you've thrown money down the drain. Chances are good that if you see the roadblocks ahead of time you'll also discover the way to overcome them.
Lastly, by doing a good business plan, you'll have a clear picture of how much money you need to raise, save or acquire so you can subsidize your business until its generating a decent profit. You won't make the mistake of under financing, another big reason why start up businesses fail.Interested in publishing this article in your ezine, website or print publication? This article is available for your use provided you include the info box below and make the link live. I know you won't use this article inappropriately by publishing it with a misleading headline or link, will you?
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