Having your own small business is a dream come true for many people as it offers quite a generous and incredible set of advantages. Being your own boss, making your own schedule and being financially independent are just few of the wonderful rewards of living an entrepreneur dream. However, very often, these dreams can easily become nightmares without the proper work conduct, planning, knowledge, and skills. Below are four common hazards small businesses are in danger of getting into specifically on the early stages of their business life as well as some great tips to dodge them.
- Poor planning
Getting your small business off the ground in the right way means having a comprehensive business plan where you have carefully stated your company’s key activities, resources, value proposition, marketing channels, customer relationship, and its financials. When creating your business plan, you have to consider key questions such as: Who are your audience? How will they purchase from you? What ways will you market your new business and spread the word publicly? How much capital will you need to start and manage your business? Your business plan has to align with the happenings around your small business.
- Insufficient capital funds
It is no surprise how many entrepreneurs tend to underestimate the amount of money and operating funding they will need as they often have this idealistic expectation of making profits right after they started operating. Depending on the type of your business, costs are bound to vary, however, the best play is to have six months’ worth of fixed cost ready on-hand, in case if things go south. After all, it is always better to be safe than sorry. Come up with a detailed financial plan for your new small business and make sure to include the summary of startup expenses, break-even points, and forecasted cash flow. You must bear in mind that a business has to have sufficient cash enough to support itself until its cash flow turns positive.
- Absence of market
A product demand has to be present for a business to earn, and ultimately, succeed. Most often than not, business owners overvalue their product demand without conducting adequate market research to understand their market. Prior to fully launching your idea to life, do a proper research to know and understand the elements of your small business and the market associated with it. A right market research should able to offer valuable information including your industry’s statistics and growth, the purchasing behavior of consumers in your niche, and how much competition you will be against with.
- Lack of marketing efforts
Your small business may come up with an excellent product, but you cannot just leave your product to sell itself, simply because it will not—sell, that is. Thus, you have to develop a solid marketing plan that targets the right audience using the right channels in order to successfully reach your sales targets. A marketing plan along with your sales plan that is based on the target markets your business is involved in is also a great way to get the word out about your new business. While digital marketing has been proven as a cost-effective approach, there are still incredible benefits in using traditional networking, teaming up and building relationships in person with other business-oriented individuals and groups.