Entrepreneurs are budding all over the world. Every country has its own resources to support businesses and disadvantages that stand as blocks. Knowing such a dipole condition entrepreneurs always go for a market study before investing into their business. But at times, even after analyzing all these drawbacks before starting a business, there is still a number of areas where an entrepreneur can go wrong.
Belief in business myths
A lot of people go wrongly directed because of people creating information of purely no authenticity. Anybody starting a business would love to discuss about it to their close social circle before they could get on board.
Doing so will definitely bring negative opinions from a bunch of people, which can sometimes be these” business myths” that we are talking about. For instance, let’s consider an entrepreneur wishing to start a bouquet business in India. This business when discussed with others, might give opinions like India does not have the culture of greeting with bouquets.
The myth continues to blame that even if there is a practice of such nature, the frequency of buying bouquets is extremely less. Now in such a condition, the entrepreneur will completely loose the interest of investing in such a business. But the underlying truth is that there is actually a very good chance that bouquet shops might get good response from the customers if done in a right way.
Investing in a business is definitely not a simple act. It binds in a lot of courage and planning. Budgeting is an important part of business that needs excess skills of planning the available financial resources.
Here, the most common mistake that can happen is rigid budgeting. Undoubtedly every entrepreneur wants to reduce the investment and costs as much as they can. But this rigid budgeting getting the figures as down as it can will give you false hopes. It can create a false image for the business from your perspective.
The business will function normally with the necessary costs and investment, but when compared to the rigid budget formulated initially, the business will look like it is putting you at loss or is going beyond the scale it should not have crossed. In the end, these thoughts will stimulate the act of shutting down the business.
Poor follow up
This common mistake arises in businesses where the entrepreneur holds a number of firms. There might be professionals appointed to completely take over the business in every location, but the term “responsibility” vanishes completely.
If an entrepreneur cannot be present in the business location, efforts are to be made at least to check the status of operations and functions. Failing to do so will ultimately bring in a condition of lethargic behavior from the employees or workers.
Lining up, productivity decreases, costs increase, profits go below the standards, or even the customers you gained may jump to the competitors in the market. On a bottom line, follow up is very important. Noticing every single action of your business and your employees will give you a base for future plans for the business.
Poor marketing skills
Marketing is all that takes a business to people. This is a very simple concept. If marketing did not exist, people will definitely have no options in life. They would have been clinging to the pioneer companies till the end without the awareness that new businesses of the same type do exist.
As an entrepreneur, it is your duty to get the right piece of information about your business to the target customers. Also, marketing strategies vary for each business. Knowing the right type of marketing that suits the type of business you run is also an art. A complete study on how to reach people should be done and the right plan must be sketched and executed.
When I say about choosing the suitable marketing strategy, I insist on product or service considerations. The product profile and the target customers for it must me studied. For instance consider a cosmetic business. Coming to connecting the business to public, it must be done in places where beauty is the domain of central importance.
A salon or a outfits showroom can be chosen to market the product. Now on the other side, the locations where your marketing efforts can fail is beach, entertainment center, educational institutions etc. Thus, marketing plays a very crucial role in the survival of a business. Spending in marketing should neither be neglected nor be done to the level of saturation.
Inadequate knowledge about the business itself
Certain people choose a business to start without any meaningful reason. It happens like choosing a name for a baby on a random basis. There are a number of entrepreneurs who have gone wrong due to this particular mistake. The only resource they will have is money to invest.
The domain of the business will completely be left untouched to study about. Entrepreneurs simply invest money considering the worth of the business in the market. In such cases, sustainability and authenticity is a big question.
When it comes to product assortment, product specifications, creativity, etc., the entrepreneur will have no path to proceed. There comes a lag in business, paving way only for failure in future. Passion and knowledge are also important elements in a business apart from financial strength.
Failing to consider feedback
Feedback recognition is a key to bring back customers to your business. Both the sides being of a feedback, be it positive or negative it definitely has an impact on the customer repetition. On receiving a positive feedback, recognise it to know where the business excels.
On the other side, negative feedback can reveal areas of default that need improvement. Despites knowing the impact of feedback recognition, many entrepreneurs fail to even create a space for receiving feedback. Automatically there arises a block between the company and the customer. In the end, the business runs on its own desire neglecting the need of the customers. Without any further stage, the business sinks in the end.
Mistakes in recruitment phase
Human resource is an inevitable resource in any type of business be it service based or product based. Choosing them with right analysis and interpretation is important. But about 50% of companies fail in this phase. This will increase the costs of recruitment. Labour turnover will be high making the entire process of business slow.
Training for new employees will be the successive expense. So, the condition of the business becomes unstable. Efforts are pushed to repair the inbound structure of the company instead of concentrating on the customers. Thus, the stage of recruitment exist with clarity and unbiased interpretation. Also, right number of employees are to be appointed. Find the appropriate number instead of getting them less or more.
Entrepreneurs run businesses to get the product or service to the customers. To accomplish this, support systems are necessary. Support systems may vary from each firm. But acquiring the appropriate systems is where entrepreneurs go wrong. Either there is less facility or inappropriate facility that gets the business to decline stage.
Promising beyond abilities
This type of mistake can be visibly found in start-ups. These companies out of excitement and excess expectations, accept business transactions that they cannot accomplish. While I say cannot accomplish, I mean the inability to achieve due to less resources and the newness of the business. The resources of the company should thus be considered before accepting orders for service or product. Failing to do so will create a situation where regular customers will slowly step away from your business.
Poor allocation of funds
Once the business starts functioning, a reasonable amount of income is generated. The income generated is always improperly used in most of the cases. Either all of the money is put for next rounds of investment or is kept idle making it useless. In certain other cases the money is spent on totally non-productive items.
Needless to mention, the business suffers to grow or to even sustain in these cases.
Demand and supply match
This is definitely not a new concept for entrepreneurs. These two words keep revolving in the business until the business dies. Even after such good awareness about these two terms, failure happens at this stage as well. Due to false forecasts an entrepreneur starts producing more than the demanded quantity.
Here there is a mismatch between supply and demand that will lead to the problem of pricing them at the least. Producing more will only let the entrepreneur push the product as fast as possible for a lowest value. this can reduce the profit margins to a great extent leading to insufficient funds for next rounds of investment.
Seeing all these mistakes, now you will have a rough idea as to where to be conscious while you start a business. Weeding out these will definitely bring your business to a standard position in the market as we have discussed all the possible areas of failure.