To say that small and medium enterprises (SMEs) are the backbone of the country’s economy is an understatement. In the U.S, there are over 30 million small businesses, with half a million more coming up every month. These businesses employ over 57 million people highlighting their influential role in the economy.
However, things are not so rosy for most SMEs startups. It is tough to set up a small business in the current, highly competitive business environment. A large number of small businesses fail with records showing only 50% of SMEs survive past five years.
If you want to set up a business, it is important to learn from those who came before you. Learning from their mistakes will set you up for success. Here are some common pitfalls you should avoid.
- Ignoring the Planning Phase
However brilliant your business idea is, you have to lay a solid foundation for it to succeed. It is a stage most business owners skip in their enthusiasm to start operations. It is a tedious process that involves a lot of research and consultations and little wonder then that many investors skip it.
It might be cliché but, in this case, ‘failing to plan is planning to fail.’ There are different tools to help you create a business plan and also carry out market research. If possible, work with a team of experts at this stage to gain the know-how you require to succeed.
- Failure to Identify a Need
What does your business seek to do? It is a question that seems obvious but the answer will determine if your idea is viable or not. Many business owners come up with the same old business models in the market and expect to succeed.
If you want your startup to grow, identify a need in the market and provide an innovative solution to satisfy this need. Companies such as Facebook, Apple, and Google started small but they had identified a need in the market. Today, they are multi-billion dollar operations growing stronger by the day.
- Skipping Market Research
Even after identifying the need in the market, you still need to carry out thorough research to understand the market. Look at your possible competition, how they do business, their strengths and weaknesses, potential customer base, challenges in the market, among other things.
Market research opens your eyes to the reality on the ground. Many small business owners rush to launch operations and fail terribly due to poor reading of the market. It is a step you cannot ignore even if your business idea looks solid. You can leverage market research tools or hire a financial advisor to guide you through the process.
- Overlooking the Need for Expertise
A new business, in most cases, has limited resources and investors try to skimp on hiring professionals. It is important to appreciate the input professionals can have on your new business. They have the expertise and experience needed to maneuver your new venture through the fast-paced contemporary business environment.
They also know the best technology and other crucial business tools to boost your new business. Avoid trying to do everything on your own and instead, start networking to find the right people early enough. The most successful startups today pay the best salaries to their employees to attract the best skills and this should is a good model to follow.
- Ignoring the Digital aspect of Business
Whether you want to launch a local restaurant or a vehicle dealership, you have to appreciate that most of your target customers are now digital.
Millennials now make up a quarter of the world’s population and are also the largest segment of consumers. These people are always online and you need to build an online presence to reach them. Don’t ignore the importance of a professional website and social media presence for your new business.
- Failure to Market your Business
A small business doesn’t require a lot of marketing, right? If that’s your thinking, you are in for a shock. Many business owners lose their great ventures because they failed to invest in marketing. It is a tough world out there and you have to invest heavily to get noticed.
There are many affordable marketing strategies from blogging, video, social media, link building, fliers, and brochures, to mention a few.
Take your time to identify the most suitable marketing model to boost your business’ visibility online and offline. This is the only way to start attracting foot traffic to your local store or web traffic to your online store.
Conclusion
Setting up a business is an exciting and thrilling undertaking but there’s a great risk of failure if you don’t plan. You have to analyze your business idea carefully, consider its validity in the current market, check what similar products are there on the market and identify the best marketing tactics. Learning these common failures by new businesses will help you set a solid foundation for your new business venture.
