Setting up and running a new business is an exciting endeavour. In a technologically connected world businesses are increasingly becoming used to working remotely. Portfolio careers which enable professionals to freelance from anywhere in the world are on the increase. And the opportunities this presents to entrepreneurs, who want to offer a service or product in a field of expertise, is there for the taking.
Making the transition from employee to self-employed can be tricky. You have to be able to balance your work and personal life, and you need to learn how to manage your time. Your time will be precious and you won’t have a lot of it to spare. So what are the most common mistakes entrepreneurs make when starting out in business?
The 6 most common mistakes
1. Coming up with a business idea that is overly complicated.
Don’t over-complicate things. Stick to what you know or you could find yourself in a position you can’t manage. Once you have the systems in place and proven track record to deliver a product or service, then you can look at developing your offering and scaling up the business.
Businesses that survive are the ones that recognise the level of work needed to turn an idea in to a successful business venture and plan accordingly.
2. Not having a clear vision for the product or service.
Any entrepreneur will be excited if they believe they have discovered a gap in the market, but a successful entrepreneur understands the idea is just the start. There needs to be a plan for the future. How you envisage your product or service over the coming years is probably more important than the idea itself.
This is where having a business plan with realistic financial projections and a marketing and sales plan make all the difference. Not planning is probably one of the biggest mistakes a would be entrepreneur can make.
3. Not establishing a demand for your product or service.
Any idea should be properly tested before any money is spent on it. Even if the nature of your business requires up-front costs such as the development of a prototype or renting or buying premises. Market research, if carried out properly, will establish a demand or otherwise and can save you a lot of money if your business is unlikely to fly.
4. Not setting up and establishing a presence online or understanding the work involved in making that presence visible.
In today’s world a presence online is not an option. It offers some of the best and free marketing opportunities. Every business is trying to be on the first page of the search engines when prospective customers search.
When you’re trying to raise awareness and establish a brand, nothing works better than a visible online presence. The problems occur for businesses when they don’t put the work in to achieve that visible online presence.
It’s the search engines that index the websites so that when a person puts in a search term only relevant web pages are returned. Making sure your website is displayed for a prospective customer when they use search terms relevant to the service or product you supply, is critical to the success of your business. That’s where SEO comes in to play.
SEO stands for Search Engine Optimisation. It allows the search engines to recognise your website content as relevant when someone searches for your product or service. You need to understand ‘On Page’ optimisation and ‘Off Page’ optimisation, or find someone who can take care of this for you. This might mean engaging the services of a freelance professional or taking the time to learn about SEO yourself.
Social media is probably the other most important vehicle to advertise your business online. If using social media comes naturally to you then you should select the right platforms for your business, establish professional profiles and start building an audience. Again, if this is not your forte you can engage the services of someone who can do this for you.
5. Not taking marketing seriously
It might be that you already have a client list or your feel your reputation is sufficient to keep the sales pipeline full. All this might be true but what if things change? Economics, world politics and advancements in technology might make a difference to demand for your product or service. If you depend on a few big clients to survive, their closure could have a significant impact on your ability to continue trading. If you haven’t established your brand through marketing you will be vulnerable to change if it happens.
Keeping an eye on the competition is vital. Market research should be carried out throughout the life your business and profiling the competition is all part of the work.
6. Not watching the cash flow
Many new businesses fail in the first five years, in part due to insufficient cash flow. You need to keep your eye on the finances. It doesn’t matter how healthy the order book if your customers aren’t paying. Consider how you collect payments. You might be vulnerable, for instance, if your business requires large up-front investment from you at the start of a contract and customer payment by invoice isn’t forthcoming.
Make sure you are on top of credit control. Consider how you structure payments for contracts so you ease pressure on yourself at the start of any contract. Whatever kind of business you are you will have overheads. Making sure you have the cash flow to cover these throughout the year will make or break you.
And finally…
You can find inspiration from other successful people. You can also find inspiration by looking at what other business owners are doing in your industry. But ultimately, your success will depend on the plans you establish for your fledgling business and how well you’ve considered and mapped its future.