Here is a worrying statistic for you to sink your teeth into. Approximately ninety-two percent of new startup businesses will fail, and that’s bad news if you’re thinking about setting up a company. Before you fall into despair though, you should understand that thousands of startups are established each year. So, if you do get one up and running, there’s every chance it’s going to be a groundbreaking success. Most startups fail because mistakes are made early on in the life of the business. You can avoid these mistakes and give your business a better shot at survival if you know what they are.
Bad Financial Planning
Some startups fail because they are ineffective at handling money and funding. Believe it or not, it’s quite easy to get funding for a new company. If you have a good credit rating, you’ll be able to get the funds you need from a respectable lender. Even with a poor credit rating, you may find you can still get a loan. It will just be a bad one that becomes increasingly difficult to pay back. The point is that setting up a business for profitability isn’t that difficult. The difficulty arrives when you try to keep it profitable. You need to think about where the best area to spend your money is and areas you can cut back. One fact to remember is that you shouldn’t be expected to just know the answers to these questions. Instead, you should hire and consult people who do.
Your first hire should be an accountant. They will be able to keep your finances in the correct order, and that’s going to be useful when the tax man comes. But it’s not the only reason to hire an accountant because they could save your business a lot of money. They will look for loopholes in spending and fill in the gaps of funding. Once you hire an accountant, your business will become more financially viable.
You may also want to hire a consultant. A business consultant will be able to advise you on where you should and should not be spending a lot of money. There are certain areas of business where you will need to invest. For instance, every owner would be wise to hire a legal advisor, even if it’s just on a part-time basis. But there are other areas that do not need a monetary injection, such as office management.
A poor leader could have a crippling effect on a new company. Lots of traits and factors can mean that a leader is not effective. For instance, it’s possible that the owner has no knowledge or experience about how to run a company. This in itself will not result in poor leadership. The owner then has two options. They can learn to lead, or they can hire people who do know how to run a business. Effective communication in business is a key part of leadership, so this would be one of the primary skills to focus on. If you can not communicate, you won’t be able to get employees to fall behind you.
Similarly, an owner might be bad at leading if they take too many unnecessary risks and gambles. The key word here is unnecessary because, in business, risk-taking is unavoidable. Taking the right risk could even help a company evolve on the market. But a leader must know what the right risk is and again, this is about knowing when to take advice. For example, a leader should not consider expanding a company in the first few months on the market. Even if the business is doing well, keeping the company small is still the best decision.
Poor leadership will result in financial support for the business being weak. If there isn’t a strong leader at the head of the company, it will be difficult to investors to sign on the dotted line. Investors know that a big part of a successful company is the individual in charge. This is who the general consumer will recognize and remember when they think of the business.
One of the biggest mistakes that business owners make is to underestimate the importance of marketing. To an extent, it’s understandable why this occurs. Business owners tend to believe that a big push of marketing at the start of the year will carry the company through the financial quarter. Unfortunately, for a business to be a success, there must be a continuous push and surge of marketing. The industry is highly competitive and without this push, a business will be lost in the shuffle.
You should make sure that you are not focusing on one form of marketing. A lot of new companies make the mistake of only investing in online and digital promotion. This is undoubtedly effective, but it can be useful to know that you can fall back on local demand. However, you will only be able to do this in a way that is personal with a high level of impact. One form of marketing to consider is a guerrilla promotion. Through guerilla promotion, hired marketers connect and interact with the audience and consumers. They turn the marketing into an event in itself.
Remember, that marketing is all about building your brand image and making sure that is associated with positive traits. If your brand has negative traits attached, you will struggle to make your business success. That’s why you must be careful not to cut corners when you organize your business model. Cutting corners may save you money but in the long run, it will damage your company image. Eventually, this is going to dramatically affect your profit margins.
To build up the brand of your business, make sure you are utilizing continuous forms of promotion such as social media. Do everything that you can to connect with your audience and don’t forget to continually improve your product.
If you avoid these serious mistakes, we’re sure your business will be a hit on the market this year.