Business failure is high with 70% – 80% of businesses closing in their first year. This statistic may scare some individuals into not starting their own business but by solving six foundational fails SMEs are destined to be more successful. Let’s look at how to build a strong foundation for a successful business.
Foundational fail 1: Not creating a business plan
In business, if you fail to plan there is a good chance that you are planning to fail. By writing a business plan you can understand clearly why you want to go into business and how you are going to be successful. Here are eight basic factors to consider in your business plan:
Your mission statement: This can be a single sentence or a short paragraph explaining why your business exists.
The product or services you offer: What will you sell or what services will you offer? You need to clearly state what these are.
Your niche: Having a niche is critical. While many people may be doing what you do, they may not be serving your niche. Research your niche carefully to ensure there is a demand for your offering.
Strategies to find prospects: How will you find your prospects? How will you connect with them?
Marketing methods: How will you market your business to your prospects? Will you use digital marketing or other methods?
The problem you solve and market analysis: What is the problem that your service or product solves? What is the size of the market? How often will they need to purchase the product over a year or month?
Your position against competitors: What makes you unique? If you and your competitor stand next to each other why would they choose you?
Financing: How will you finance your business? Will you use your money, take out a bank loan, or use an alternative finance provider?
By getting these basic factors in place your business is destined to move towards success.
Foundational fail 2: Being indecisive
Running a business is risky and you won’t always have all the answers or a perfect solution. But if you don’t decide, you can hurt your business just as much and maybe more than if you make a decision.
It is crucial to consider the factors of a decision and decide. If you let the idea mull too long in your mind you may lose the opportunity and struggle to build a business. So be decisive. Remember with each decision you make; you are either successful or there is a lesson to be learnt.
Foundational fail 3: Not being consistent
To build trust with your customers, you need to be consistent. If your service or product is different every time your customer connects with you then you will struggle to build trust. Set a minimum benchmark for your business and ensure that everyone in your business adheres to the minimum.
Foundational fail 4: Mismanaging the business’ cash flow
When the money starts to pour in, many entrepreneurs may take all the money and buy a gift for themselves because they deserve it. But they forget that the money doesn’t belong to them but rather the business and they are stewards of the cash. They need to ensure all the basic costs are covered and that an emergency fund has been established before they splash out. In the basic costs, you should include an industry-standard salary for yourself as you are your business’ first employee.
When your business does start to make a profit, you can consider taking a bonus for your hard work.
Foundational fail 5: Hiring the wrong staff
You can’t do everything in your business and there may come a time when you will need to hire staff members to help you run your business. You need to hire slowly. Ensure the employees fit in with the business culture as well as being able to do the work. Your staff should be competent and willing to work for you. Ensure that you hire people to do the things which you are not an expert on and keep the main operations of the business in-house. You can outsource your bookkeeping and other departments but ensure the areas which are crucial to your business are staffed in-house.
Foundational fail 6: Embrace failure
As with most things in life, when you start you will make mistakes. It is important to review the mistake and move on. Look at failure as a teacher for what not to do next time. By viewing your mistakes with a positive mindset, you can build a more successful business on the teachings from the past.
By avoiding these six foundational fails, you will be well on your way to running a successful business.
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