Building a business from the ground up is hard work. There are numerous factors to consider and several critical decisions you have to make. All this has to be done in a high-pressure context where time is of the essence. A single wrong move could see you crash and burn or at least set you back several months.
Whereas there is no hard and fast path to business success, knowing the most common mistakes can significantly increase your chances of making it. We look at some of these pitfalls below.
Skipping the Planning
Planning may be a tedious and time-consuming exercise that we would all want to avoid if we could. However, without a clear and well-thought-out plan that encompasses proof of concept, market potential, and competitor research, your business will be firmly on the path to failure. It’s akin to groping in the dark.
You should devote plenty of time and resources to planning. The plans include not just an overall business plan but also a financial plan, a marketing plan, and a product plan.
Underpricing Your Product
Whatever product you come up with, there are likely established players that currently capture the majority of market share. Walking into this environment can be intimidating, and some desperation may set in as you pull all stops to make sure your product is noticed quickly and thus starts generating sales revenue from Day 1.
One way to do that is to underprice your product. This is an ill-advised strategy and can inadvertently undermine the value proposition your product brings to the table. Also, a product whose price is much lower than all its competitors may arouse suspicions and questions around its quality.
Recovering from an underpriced product is a slow and steep climb. If your existing customers are already accustomed to your low price, suddenly slapping them with a higher price is likely to meet spirited resistance. Ergo, explore the market, have confidence in your product, and then get your price point right from the get-go.
Not Leveraging Technology
The 1980s, 1990s, and early 2000s were marked by an M&A frenzy. Big businesses would voraciously gulp their small competitors via acquisition. This reduced the number of industries into a playground dominated by just a couple of giant corporations. As IT and the Internet have become ubiquitous though, small businesses have found that technology can give them the ability to go toe-to-toe with billion dollar corporations in the battle for customers.
Therefore, tap into technology to reduce the number of employees you need, speed up processes, scale operations, and enhance efficiency. By failing to take advantage of IT systems, a small business stands little chance of making a mark.
Failure to Market
No matter how good your product is, your potential customers will not know of its quality or existence if you don’t find a way of telling them about it. Marketing can take multiple forms, and it’s actually best to use different methods as each may appeal to a different demographic. Common marketing techniques include word of mouth referral, flyers, posters, billboards, internet marketing, email marketing, and social media marketing.
Many first-time business founders make the mistake of viewing marketing as something they will do only after they’ve budgeted for everything else. On the contrary, it’s the thing you want to spend a significant amount of your resources on. It could make the difference between failing and succeeding.
Not Securing Intellectual Property
You’ll probably be coming up against competitors that have an army of employees and deep pockets. As you plan your business, think about the possibility of such a large competitor replicating your idea and launching it at scale. If that happens, your business will be dead before it gets off the ground.
You can lower the chances of that happening by locking down your intellectual property. That includes copyrights, trademarks, and patents. It’s also about making sure no one can ride on your reputation and social capital by illegally using your business name in any country you operate (see Mistakes to Avoid When Naming Your Business | Incfile).
Millions of entrepreneurs have walked the startup journey before. Many have succeeded while others have made catastrophic mistakes. By learning from their mistakes, you can make your journey to business success a smoother one.