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As an entrepreneur and start-up mentor, I have been involved in several new small businesses and start-ups, and I discovered a pattern of mistakes start-ups make it affects their viability in the long run. Many entrepreneurs have great ideas and can explain their business proposition very well. They are potentially experts in their field and know all technical aspects of that business, for instance, Maya from Mexico who I was mentoring.
She wanted to start a bakery and café business and no one could explain the differences between various doughs and coffee blends etc. She was a passionate young lady who didn’t get No for an answer, but her business skills were limited as you can imagine. She didn’t know where to start and how to establish a successful bakery and café. Gratefully she spent long hours on her business plan and could start a successful business in Melbourne. I was honoured to be able to assist this determined lady to set up her business.
Here I write a summary of the most common mistakes startup makes before establishing their business:
1- Not setting the right goals
Goals are extremely important in any ta
sk you want to do and complete. We set them nearly every day; a shopping list for supermarkets, booking hotels before travelling on holiday etc., these things we do by establishing clear goals without even realizing it! surprising that people have so many other goals going around inside their heads - but when its time to get down into specifics about what exactly will make life better then most find themselves stuck because they don't know where or how to start sometimes.
The idea of setting goals is quite popular these days, but it can be difficult to know where you should start. One way might involve making your desires more specific and writing them down so there's no room for confusion or misunderstanding about what exactly it is that you want out of life - whether financial success with an extensive amount of cash in hand; increased brand awareness among others like-minded individuals who share similar views on certain topics (this will help expand ones social circle); achieving new levels
Studies show people with clear and written goals are dramatically more successful than the ones who do not have goals. The first thing you must consider when setting your goals is to be specific. People tend to say I want to be wealthy or have more brand awareness, but these are open to interpretations. You must specifically mention how much you must earn each month to be wealthy, or how many people should recognize your brand in order to have good brand awareness.
The other thing is goals are meaningless if they do not have a timeframe. You should set a deadline or timeframe around what you want to achieve. Otherwise, you don’t feel the obligation to reach or finalise your task. The shorter timeframe is better, like in the first month of starting a business or within the next quarter.
2- Not having specific target markets
Your business is about building relationships with people who need your product or service. You may not be serving everyone, but you can still offer something valuable to the group of individuals that matters most and work hard on creating an experience for them where they feel like members of this family.
For example in the car industry, the meaning and usage of cars are the same, but different manufacturers make cars for different kinds of people. Toyota Yarris and Jaguar F-Type are two cars made for completely different target markets. They are not trying to tap into each other's market, because customers’ needs in each segment are met by them separately.
An effective entrepreneur knows that you need to focus on your target market and offer something they'll find compelling. Don’t worry about people who are not in this group, but provide value for those specifically looking forward to it!
3- Not clear competitive advantage
Selecting your target market gives you focus, but you also should provide a reason for those people to choose you over your competitors. You can't just hope that people will switch from their current provider to you. You need a compelling reason for them, and the only way of doing this is by making sure your service or product offers something they don’t already have available through another company- so make it worth their while! Businesses with no or limited competitive advantage struggle to survive and have to drop their prices all the time to be competitive, and as you can imagine, dropping prices can make your business not viable and profitable.
There are so many ways to work on your competitive advantage, my favourite one is Blue ocean strategy.
4- Not knowing your legal issues
The requirements of the law can be a pain in your business.
The best thing you could do for yourself is to learn about all these legal things so that they don't get on top of what we're trying to do here at our company! This is a boring fact that we need to work and operate within government and legislation boundaries which is beneficial to everyone, however, many startups just ignore these and prefer to stay in denial until something happens. Startups must check federal and state laws in their field as well as check required licenses, Permits, Registrations and special requirements.
Meanwhile do not forget the taxation and structure, patents and trademarks, and work health safety requirements.
Nearly all businesses in Australia need some level of business insurance as well and not being insured put your business in big jeopardy. You need a proper investigation and planning before operating your business commercially.
5- Not knowing your industry
It is very important to identify and understand which industry your business belongs to. Sometimes your business can be under two or three different industries and studying all of them can be extremely helpful to make you understand the present state and future prospects for the industry. You should ask yourself these questions when researching your industry: is the industry growing or declining? What are the key success factors in this industry? Identify the major players in it and also what are the barriers to entry?
In the end, startups should decide if this is a promising industry to walk into or just re-think and find a better option. To research your industry, check the trade magazines, government websites, university publications, experts in the industry or checking the IBIS World.
Obviously, there are many more items you should think about and consider when starting a business, but the above list is the ones that can be ignored or not paid enough attention to it occasionally. Preparing a business plan is the best way to ensure startups cover all required items.
And don’t forget, Failing to plan is planning to fail.