A light bulb has just gone off in your head “I’ve got it!” you say to yourself, “I’ve just thought of the million dollar idea!”
We have all had those million dollar thoughts but thinking the thought and actually exercising its creation are completely different. If you are serious about your million-dollar baby and have started the process of creating it’s existence, take note of the 10 most common start-up business mistakes and avoid them.
1. Not Writing a Business Plan
Creating and writing a business plan is a vital step in starting a business. One of the most important contributors to your business success, a business plan puts every part of your business in writing. List your goals (both short-term and long-term), financial plans, and operational steps. Check out www.score.org for help writing a business plan.
2. Poor Researching
A common mistake new business owners make is in the research arena. Lack, or poor researching can doom your business from the get-go. A business owner must take the time to look at the marketplace and determine the demand and profitability of the service or product being sold. Do not overestimate your products uniqueness or the populations’ enthusiasm for your product or service. Know the competition and alternatives out there. Find a niche market.
Look at demographics and population statistics at www.census.gov. Cater to those individuals by providing a product or service that helps them save time or money.
3. Strong Identity and Brand
Naming your business may seem like the most enjoyable part of starting your business, but one’s business name can make or break a company.
A business name must give your company a strong identity or brand and must be relative to your product. Consumers must be able to determine what is being offered for sale simply by looking at the business name or logo. In History, Chevrolet tried to introduce the “Nova” automobile to Mexico. The brand was a flop, “Nova” interpreted into Spanish means “no go”. Give your business name a lot of thought; you will turn it into a brand.
For more information on naming your business visit:http://www.sba.gov/smallbusinessplanner/start/nameyourbusiness/index.html
4. Losing Focus
Staying on track and keeping focus will help keep your company successful. Venturing too far off the initial path may cause you to lose sight of what is important. Keep your business plan within arms reach. Look at it often to keep yourself focused and on track with your goals.
Be honest with yourself, make adjustments as needed; if a certain component of your product is not meeting standards, replace it. Ensure your strategies are flexible.
5. Money Matters
A big myth in starting up a home-based business is that it will not require much capital. Do not underestimate your businesses start-up capital. Ensure that you will have enough capital available for your companies’ goals. Be realistic. Starting an organic juice company may require a great deal more capital than forming a pool servicing company. Research financing opportunities at: http://www.smallbusiness3.com/financing
Ensure your service or product is appropriately priced. Your goal is to make a profit, failure to pay attention to cash flow will stunt your company’s growth.
6. Customer’s Roles
Business owners need to fully understand their customer’s roles in the rise or fall of their company. A common mistake made by business owners is not engaging with the customer until the final product has been released. This lack of feedback prior to the launch of a product can be disastrous and cause long delays.
Customers will give their feedback good or bad, this information needs to be collected and used to better your product or service. Provide an avenue where customers can give you their feedback, i.e. survey, comment card. Have policies and procedures in place for handling customer complaints. Ensure all members of the company are aware of these policies and procedures. If providing refunds ensure these are processed in a timely manner. Remember lack of customer service will come back to haunt your company.
7. Limiting Business
Many companies start off with one product or service being offered and quickly realize that they have a spin-off product or service opportunity on their hands. For instance, you start a fresh cut firewood company. After several months in business, you keep hearing the same feedback from customers “gee, I really wish your company delivered. I hate driving in the snow”. Bingo! You listen to your customers and start offering delivery service and see sales increase 300%.
Look into the future growth and sales of your company; do not let your business stagnate. Change is inevitable. In order to survive your company must change and adapt to the marketplace. Limiting your business and wearing blinders will suffocate your companies potential. Small business owners must resist the “I am only a small business” frame of mind. You are not small you are a specialty company. You are not small; you offer personalized service and call your customers by name.
8. Hiring for Wrong Reasons
Owners of companies must resist hiring employees for the wrong reasons. Employees must have the skills necessary to perform their job duties efficiently. Your friends-friends daughter may be a great person, but do not hire her as a favor to a friend. Hire her because she has the skill set you are looking for. Hiring out of convenience or obligation will not help you achieve your goals.
Similarly, resist the urge to bring on a partner to quickly, when it is unneeded. Splitting the profits with a partner when it is unjustified will surely handicap your growth potential. Bringing on a partner because you do not have the money to pay for their employment is also a common mistake.
9. Lack of Continuing Education
Learn, learn, and learn. Never stop educating yourself on your business, competitors, and marketplace. Subscribe to trade magazines. Join associations. Attend conferences. Enroll at your local community college. Do what ever it takes to stay on top of your game. If you don’t your competition will.
It’s simple. Stay legal. Pleading ignorance will not save your company when faced with lawsuits and judgments. Hire an attorney to ensure that all necessary legalities are addressed. There are taxes and labor laws and employees and contracts and disclaimers and zoning and…. and…and…. you get the point; hire a lawyer. Important governmental websites to bookmark are:
www.irs.gov Internal Revenue Service
www.business.gov Federal Government Rules and Regulations
www.epa.gov Environmental Protection Agency
www.ftc.gov Federal Trade Commission
www.dol.gov U.S. Department of Labor
Protect your brand or product with a trademark or patent. Hire an attorney who specializes in intellectual property law to further protect your concepts from theft.
To perform a trademark search, check out the U.S. patent and trademark office website at: www.uspto.gov
While starting a business can be a daunting task full of doubts and fear, it is the American dream being upheld by thousands and thousands of people. The U.S. Small Business Administration estimates that home based businesses generate a whopping 102 billion dollars in annual revenue (www.sba.gov). This SBA figure is proof that American businesses do succeed when armed with the knowledge, experience, and the perfect million-dollar idea.