Owning and operating your own business puts you on a pathway to financial independence if it is successful, but if it fails you can be left with a broken dream and mounting debts.
If you can avoid the common problems that cause many start-ups to fail, you are increasing the chances of success exponentially. But what are the common pitfalls for start-ups? Let's find out.
Poor Planning & Preparation
If you have failed to plan, you have planned to fail. The biggest reason many start-ups fail to get off the ground is a lack of planning, preparation, and foresight.
It is not just financial planning either, though this is very important. Many businesses fail to take into account their legal responsibilities and liabilities. This is especially true of start-ups that have an international element to their business. The business may be sourcing products from foreign suppliers or selling its products and services to international consumers.
Importing and exporting goods or selling services over international borders can create legal issues that can stop a business in its tracks and add to its expenses.
With the help of companies who offer legal translations, like Rosetta Translation, you can ensure that your business stays up to date with legal requirements in most languages. Their experts can complete legal translations in a number of different languages including Chinese which can help a start-up negotiate legal hurdles as they source suppliers.
Not Enough Resources
A lack of resources, whether financial resources or manpower, is another big reason that start-up businesses fail. It takes a lot of both to begin a successful business, and you will constantly be playing catch up if you do not have the right people and enough capital in place when you start trading.
Cash flow causes many start-ups a problem. Without enough cash on hand, they can struggle to pay their bills before customers pay theirs. This can lead them to use temporary overdraft facilities or short-term loans to cover the costs, paying interest on the money they need to operate. This solution never works for a business, as they go from month to month paying off debts that should be behind them.
Without the right manpower, no amount of money can help you. Stretching the workforce, and yourself, to meet targets or honour contracts leads to huge amounts of stress for everyone involved and limits your capacity for growth.
There is no secret formula for working out how much money your business will need in its early days, or what kind of staffing levels it will need to succeed. The best bet is to carefully work out your budget, and then double it. It is better to have too much money than too little.
Being Too Successful
Can success lead to failure? The short and simple answer is yes, it can. If business starts to boom too soon your business can become a victim of its own success. A growing customer base needs a growing business to supply it, and this can be both time-consuming and expensive.
Expanding a business to meet demand is a challenge, especially if it requires expanding your premises or moving to a new one. The increased consumer demand can open the door to new financing options to help, but money is often not the problem; time is.
If customers do not get the products or services they want in a timeframe that suits them, they will move on. This can be deadly to a small business. If people have a bad experience with a business or feel let down by its service, they will tell everyone they know about it. Suddenly the excess demand can begin to disappear just as you have expanded the business enough to meet it.
Outsourcing is a solution to this problem, whether you use it from day one or as the business starts to grow. It helps a business to be more flexible and meet the peaks and troughs of customer demand. It also helps to control expenditure.
Poor Marketing
A big challenge for any business is letting people know about you. Marketing can be done physically, with flyers, posters, by mail, or online on websites or social media. Most businesses rely on a mix of the two, with advertising online slowly gaining a bigger market share as demographics change.
Marketing needs to instil a brand image in the minds of consumers, so they feel like they know and trust you and will go to you when they need your service.
Many start-ups see marketing as a way to save money, taking a do-it-yourself approach, but this is a mistake. If you want your business to succeed you need to place your trust in the experts. It may require a little investment from your business, but good marketing pays for itself very quickly.
Before you start your business up, think about these problems that other businesses before you have faced. If you can avoid these problems or have a plan in place to deal with them, you are maximising your chances of success.
