According to this source, around four in every 10 start up businesses are destined for failure. And if we’re realistic, going into anything where the success rate is only 60%… well… it doesn’t sound too encouraging, does it?
If you want to avoid being part of the unfortunate 40%, then you need a special mixture of components. Some of it will, inevitably, come down to luck – even if the successful businesses don’t want to admit it. Along with luck, you need the right idea at the right time – and furthermore, you definitely need to avoid these classic mistakes.
#1 – Overimagination
At the start of a business concept, you think everything sounds amazing. You’ve got your idea and a fair notion of how you’re going to put it all together. You’ll often be surrounded by friends and family who, for nothing but good reasons, will tell you that your idea is amazing.
So you forge on, create a brand, start your business, dive in head first and then realise… there’s no interest. It’s one thing to have an idea that appeals to a small group of people; it’s quite another to find something that has a broad spectrum appeal to the general populace.
This is why you have to focus group your ideas and tell your supporters to be completely honest when it comes to feedback. Anything else and you could be setting yourself up for a fall.
#2 – Forgetting The Legal Side
Tax is taxing – it’s something we all know and have to battle with on a personal level every year. Business tax matters, however, are even more taxing – and getting it wrong can sink your company. All it takes is to classify your business the wrong way or fail to incorporate correctly, and suddenly you end up with a bill that’s going to result in bankruptcy.
What’s particularly baffling about this problem is that there is so much help available. Your Company Formations, a registered formation agent, and others like them can make sure you hit the ground running when it comes to the legal side. As for tax, there is plenty of help available through accountants or even through the tax office itself. So ask questions, be upfront, and never leave a loose thread unattended to.
#3 – Not Spotting A Gap In The Market
If you have a truly unique idea, then this might not matter – but few ideas are original now. If you are entering an overly saturated market, then you have to be sure you have something different to offer to customers. If all you are doing is replicating the business model of another company (or many different companies), then this is an immediate concern.
If you are going to be another fragrance company or another customer services company, then what makes you different needs to be front and centre of all of your branding. You have to stand apart, or you’ll fade into the crowd without any proper recognition. If you are doing something better, then you need to say so loud and proud.
#4 – Forgetting To Market
The idea of entirely forgetting that you need to market your business might seem impossible, but it can and does happen. You can get so caught up in the basics of making sure the business functions that you forget you need to tell people about it. Investing in marketing – both on and offline – is an essential for every business from one-person companies to huge staffed enterprises. The moment you think you’ve done enough marketing could be the beginning of the end – so be loud and let everyone know.
#5 – Not Capitalising When Things Go Well
There comes a point in a business where you have to expand if you want things to succeed. Too many entrepreneurs find themselves dealing with more orders than they can handle, getting to the point where they have to turn down business. Not only does that lose you money in the moment, but it could potentially cost you a client in the long-term. If you reach this point, then you have to seek investment so you can continue to grow – even if it means taking on company debt. It’s better that than pass up the opportunity to be really successful.
#6 – Being Too Prideful
You would be surprised at how damaging an emotion pride can be. When a business is suffering, many entrepreneurs try and go down the route of managing it for themselves. They don’t want help, or don’t feel able to take it. This is a damaging way of thinking; if someone (be it a person or another company) can help you, then grab their hand and go for it.