Mistakes To Avoid When Starting A Small Business
A lot of us has attempted to get into small business but we never get the chance to see our business grow because they often fail while still at their infancy.
Read the tips below to avoid making any more mistakes that could bury your business;
Bad Pricing
“My single biggest mistake with my first business–a handbag company–was in pricing,” says Sarah Shaw, CEO of Entreprenette, a consulting firm in Durango, Colo. Her’s is a common misstep for product manufacturers. “I didn’t understand that with any kind of clothing or accessories, you have to calculate the square footage of fabric, including the wasted fabric,” Shaw explains. Without an accurate understanding of her costs, she couldn’t price her products correctly.
“I thought you sort of doubled everything, but that’s not correct,” she says. “It’s a 2.5-times markup from cost to wholesale, which covers marketing, the showroom fee, all your expenses.
Waiting For Perfect When Good Will Do
When you’ve got a killer idea, it’s natural to want to introduce it to the world in a fully formed state. But it doesn’t take a CPA to figure out that the longer you take to launch, the longer you go without money coming in.
You need to come up with the simplest, basic version of your product that gets the idea across and try to find someone you can sell it to.
Find one or two clients who are willing to do a pilot where you build, test and iterate it. Inevitably, your product will be different than what you expect, and then you build it. If you get a real, live client, you create a better product in a very cost-effective way.
Being Cheap About Marketing
“People think, everyone else has to market their product or service. The related myth is that you can rely on social media to build virality and attract customers for free. “Social media is not free,” he says. “To do it properly takes unbelievable amounts of time, and it’ll typically take six months to a year before you’ve got even slight momentum–it’s not fast.”
If you’re not sure how much money to budget for marketing, aim for 10 to 20 percent of your targeted gross revenue. “As you become a more established business, that drops to 5 percent to 10 percent of gross revenue, and for the largest businesses it’s typically 5 percent or a bit less.
Planning Only For Success
Every entrepreneur dreams big dreams, and thank goodness but sometimes things go awry. In order to be successful, a new business needs to remain flexible in its processes and develop easy-to-understand contingency plans in case the idea isn’t as big of a hit as expected. A line of credit from your bank, for example, need never be used but can be critical when you hit a bump in the road
Working With Friends Instead Of Business Partners
In our example, Tom and Jerry are good friends, but they need to treat the business seriously. Jerry has a day job, so Tom needs to ask some hard questions: Is Jerry going to keep his day job? Does he expect an equal share of equity? More on that below. To be successful, business partners cannot be afraid of hurt feelings.
Counting Your Eggs Before They Hatch
Let’s say that in year three, Tom and Jerry are making good money and selling a lot of cheese. They now have dedicated employees, a recognizable brand, and good relationships with farmers and grocery stores. But, somehow, they didn’t realize they needed to comply with food labeling regulations.
