Starting a business is always self-satisfying and rewarding. You become your own boss and do things according to your plans. What else could beat this? But there are challenges along the way, which you need to learn how to avoid, or deal with. In this article, we are going to look at five common mistakes that people make in their first year of business, and how you can avoid them. Avoiding these mistakes can help you evade the risky nature of running a business. So, let’s head straight on to the mistakes you should steer clear of.
Not Doing Any Market Research
Market research is very important for a startup. It will help you to learn and understand the true need for business. How much do people want your products or services? Are they interested in what you offer as a business?
Market research is what will show you the viability of the business. Often, many just end up starting their businesses without carrying out any market research. Then, they get shocked when the reception is poor among potential clients. Sometimes, even something as small as location can affect the business and its growth.
Dan Schulman, CEO of PayPal– has this to say on the importance of knowing your customer – “Stellar service should be non-negotiable and merchants shouldn’t hide behind self-service tools and technology when it comes to knowing their products and taking care of their customers.”
If at all you can’t conduct market research on your own, then it would be better to outsource professionals who can do it for you easily. If multinationals and large corporations conduct market research when opening up new business locations, then why is it that you shouldn’t do this as a startup?
Ignoring the Competition
As much as you’d want to feel confident and claim that you’re way over the competition, it is still important that you acknowledge their presence. Competition is always going to be there. And you need to put yourself in a competitive position to defeat them.
When you acknowledge that there’s indeed a competition, you can find creative ways to stay above them and defeat them. But if you don’t, they’ll always be steps ahead of you within that same industry or space.
Besides, there are tons of things that you can learn and emulate from the competition. If they’re doing something, and it’s working, then why not do it too? After all, what do you have to lose if it works? Your pride?
Focusing on the Wrong Goals
Focusing on the wrong goals can hurt your business greatly. You need to sit back and devise ways that you can get your goals right. This should be implemented right from the beginning so that you can establish a clear path of business.
Paul Moutzouris, Director of Ingenuity Design Group has this to say on setting the right KPIs from day one – “One of the most detrimental mistakes a business can make is by not measuring the right KPIs from day one. Vanity metrics that don’t impact the bottom line such as impressions, views or even clicks, should not be used to determine the success of a campaign. Instead, owners need to track conversion rates and have each step of their funnel measured, so they can have the ability to make adjustments as needed. Otherwise, businesses could end up burning their resources, leading to potential cash flow issues.”
Not Taking into Account Your Own Strengths and Weaknesses
It is vital that you recognize what you’re good at and what you’re weak at. This will help you find the right motivation to do things within the business. Also, you can perfect your strengths as you work on your weaknesses. Let’s face it – nobody’s perfect in this world. We are all trying to make things work. Therefore, don’t feel bad about your weaknesses. You might be stronger in things others are weak in, and vice versa.
At this stage, it may be important to find a business partner who compliments you – though not a must. If you do decide to go this route, find someone who is strong in areas that you’re weak in.
Jeff Bezos, former CEO and founder of Amazon, has this to say on playing to your strengths as he explains his “skills forward approach” – “Working backwards” from customer needs can be contrasted with a “skills-forward” approach where existing skills and competencies are used to drive business opportunities.”
He goes on to say “The skills-forward approach says, “We are really good at X. What else can we do with X?”. However, if used exclusively, the company employing it will never be driven to develop fresh skills. Eventually the existing skills will become outmoded”.
Not Understanding Your Market and Target Audience
Do you know your market and your target audience? If you don’t, then what else are you going to sell within your company? For technical startup founders, it can seem a lot easier to write codes compared to seeking out customers or clients. But how will you tell whether you’re on the right track if you can’t get feedback from your current and prospective clients? They will help you make improvements where needed and change the business to reach a larger audience if need be.
It is important for startup founders to recognize the fact that building the best product or service simply isn’t enough to get a successful business. Sometimes, this is what causes many startups to struggle to build a big business in a tiny market.
As a startup founder, you could easily get caught up in the excitement of starting your own business. Don’t let this excitement lead you into forgetting the basics of the business. Hopefully, by going through these mistakes, you have understood what you need to do and what you don’t need to do.