Starting a business can be a steep learning curve. Being aware of some of the most common mistakes that people make can help you to avoid them, and have a better chance of succeeding. Most businesses fail within their first year. To avoid being one of these, avoid these mistakes.
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Poor or Inadequate Research
Research and planning are essential to ensure that your business idea is viable and that your pricing is both competitive in your marketplace and provides an adequate return.
Lack of in-depth market research
It's easy to get carried away with a business idea and set up a business without testing its viability. Accurate market research data will make sure that you are able to understand your market and create realistic forecasts.
You should think about audience and customer needs and use market research to test them. Feedback can be factored into your products or services.
Keeping your business ideas to yourself
Sharing your business ideas with people that you trust means you can benefit from feedback. Make note of any good ideas you get from brainstorming and use them when you decide how to take your business forward.
Gathering feedback on your plans and feedback can help you to find whether or not a product offers a solution to a problem or something new that customers would purchase. Positive feedback should support and inform the decision you make and could help to attract investment. Negative feedback provides you with the opportunity to rethink your plans and could help you make better use of your time and money on more profitable products.
If you want to keep your ideas a secret, you could use a non-disclosure agreement. This is a legal contract between you and another party not to disclose information that you have shared for a specific purpose.
Weak Financial Planning
A lack of funding or contingency planning or a reluctance to take professional advice can cause big problems.
Lack of funding
Having enough capital is essential for the survival and prosperity of your business, and is a primary indicator of your business health. It is important to create a business plan to attract and secure the right type and amount of funding. A business plan can:
Be used as a tool to structure the financial side of your business and can be updated and changed as your business grows
Keep your expectations grounded for what the business can deliver
Lack of a contingency plan
There are situations that you can’t control that could impact your business and cash flow, such as interest rate rises, transport strikes, and political instability. While your business can survive periods with no profits, it cannot survive without cash. Building up cash reserves will make sure you can keep trading, even in difficult times.
A reluctance to seek professional advice
Failing to see professional advice from an expert, such as a dental CPA, will make financial trouble worse. Consulting an accountant or financial advisor with experience in your industry can help you ensure you manage your money effectively.