Statistics show that over 70 percent of small and medium scale businesses in Nigeria fail within the first 6 months of startup while only about 10 percent get returns on their startup equity.
So, if your aim is to start a business, survive, get returns on your investment, and grow, then you must pay attention to what am about to pass across so as to avoid the following mistakes entrepreneurs make which ruin their businesses.
These are common but avoidable mistakes entrepreneurs make and solutions to them:
1. STARTING ALONE:
When starting a business, it is advisable to assemble a team or form a partnership. A partnership is like a marriage in which parties involved strives to withstand pressure and work towards the growth of the relationship.
It is also advisable to build a team or employ workers with the offer of a share of the profit if the business meets a particular milestone.
This makes them to see themselves as part of the business and strive to meet the set targets. Also, having a co founder splits the work burden for you and increases the capital base of the business.
It is worthy to note that most big ventures today like Apple (makers of iphone) started out as a partnership.
2. INADEQUATE CAPITAL PROVISION:
Many start up businesses fail because of this singular act. It is advisable to establish numerous sources of generating fund as a starter – friends, family, investors and even clients who you can collect money from to produce your goods and supply to them later while retaining your profit.
In order not to fall into what I call “starters financial pit” ,that is looking for funding 2 to 3 months after startup, it’s advisable to ensure adequate sources of fund to cater for the operational costs for 3 to 6 months as it might take up to such time before the business drafts to break even.
3. NOT HAVING A REALISTIC PLAN
Any business without a plan can be likened to a football field without a goal post – directionless you may say. An entrepreneur should be able to create a good plan and go ahead to execute it.
A business plan gives direction to the business; helps in convincing investors as well serve as a tool for accomplishing the goal of starting the business.
However, it is important that the plan be made to be flexible so as to eat able to accommodate changes and risks that may occur in the business from time to time.
4. NOT CONDUCTING THOROUGH MARKET RESEARCH
This is one of the major causes of business failures. Proper market research would enable you discover the market size, your competitors, and nature of competition in the market, how to penetrate the market, likely growth path and to determine whether the existing market is large enough to accommodate a new entrant.
All these are important factors to consider before starting a business and inadequate knowledge of these has caused many entrepreneurs to wind up few months into the business.
5. MONETIZING THE BUSINESS WITHOUT CREATING VALUE
Most new businesses fail because of their inability to create value but rather focus on making millions like the existing ones forgetting that to compete favorably one must create value.
By creating value I mean;
● Offer a better solution to a problem than the existing products.
● Offer a cost effective product.
● Be unique.
6. ASSEMBLING THE WRONG TEAM
For any business to grow, the services of knowledgeable personnel are needed. These includes but not limited to; a good non-litigious business lawyer to guide in building the business corporate structure and crafting proper contracts to protect the interest of the business, good accountant to accurately record the transactions and prepare the books to help you monitor your performance as well for public scrutiny, a good project manager to help in planning and setting achievable milestones for the business and also a good HR person to help you in hiring workers that share in your business vision and negotiating reasonable compensation.
Hiring the above mentioned personnel may not be necessary as a starter but having access to their services when needed is crucial to the success of your business.
7. NOT SETTING MILESTONES:
Most entrepreneurs fail because they see starting a business as one way traffic: Start > Grow > Gain. However, in reality, it is not always so. Thus, it’s important to establish realizable milestones to enable you channel effort towards achieving one at a time as well as monitor your progress. For instance, if you intend starting a fruit juice producing business, you can break down this idea into different achievable baselines such as:
First: starting the business.
Second: your expectation in 6 months
Third: your expectation in one year. And so on.
Setting baselines like this would help you monitor your performance over time and don’t forget to celebrate each milestone achievement with the people that made it possible as this would serve as an incentive to you and them to keep pushing for more.
8. NO SPECIFIC TARGET MARKET:
The aim of every entrepreneur is to have as many people as possible to patronize his or her business so as to make more profit. However, as a starter it is advisable to move from specific to general. That is, to target a particular portion of the market first as this saves you the resources and enable you to communicate and engage effectively.
9. NOT HAVING A FEEDBACK CHANNEL: Having a plan and sticking to it is a very important tool and technique in starting and managing a business successfully. However keeping an open communication environment helps you collect feedback, public opinion and critics from customers and the public. Though, not all feedbacks are relevant and the established goal of the business shouldn’t be derailed from, some of these feedbacks can form the backbone for future innovations.
10. HIDING THE IDEA: A lot of entrepreneurs go into business without any effort to find trusted advisor, seek counsel from existing business owners or discuss with their friends because of the fear of being discouraged or losing the idea to others. In as much as these things sometimes occur, it is advisable to discuss your ideas with trusted advisor as well as conduct a proper research.
Finally, don’t let procrastination or fear of failure kill that wonder idea in you, for even in failure, we learn and it’s only when we try that we fail or succeed. So start something today and if you fail, try and try again.
HOPEFULLY, THIS HELPED SOMEONE, EITHER IN TERMS OF ADVICE OR GIVING YOU THE CONFIDENCE TO START YOUR OWN BUSINESS. SO, DONT FORGET TO HELP OTHERS BY SHARING THIS POST ON YOUR SOCIAL CIRCLE.
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TAKE CARE AND SUCCESS IN YOUR VENTURES.