Being the owner of a startup business is stressful in itself. There are so many risks to navigate, mistakes to avoid, and costs to meet. Unfortunately, because of the difficulties that new entrepreneurs face, 20% of small business fold in their first year, and 50% close for business by their fifth year in operation.
These numbers are both startling and sobering, and they may even be discouraging to prospective entrepreneurs, but failure is a risk of going big. However, for those who are able to manage the risks of starting a business, the rewards can be invaluable.
Undervaluing Your Products
Overhead costs are a harsh reality of doing business. When selling goods, it is important to calculate costs such as packaging, shipping, and even showcasing your goods.
While you would ideally like to beat the prices of your competition, you may not be able to do this when you initially start your business. Trust in the quality of your products, and price them accordingly so that you can see a profit from them.
Many people are of the notion that you simply double your production costs and there you have the wholesale value of your production costs, but according to entrepreneur Sarah Shaw, the actual wholesale price should be about 2.5 times your production costs, which will cover your marketing, shelving, and other costs associated with getting your products to the consumer.
Poor Planning
One of the most common mistakes made by beginning entrepreneurs is that they don’t plan for their success. Planning is one of the most important steps to undertake before going into business. You need to understand what the market potential is for your goods and services, and you need a strategy to maximize this potential.
The type of research that you will need to do before opening your doors to business will be relative to the type of business that you are planning to run. However, some basics, like the right location, and your competitors prices are always relative.
You will also need business, financial, and marketing plans. No, they are not all the same. Your business plan is all about what products your business offers, and how you will make a profit off of them. Your marketing plan is all about increasing the visibility of your business. Your financial plan is how you will continue to fund your marketing and business plans while at the same time seeing your profits.
Lax Hiring
Unless you plan to be the sole operator of your business, you are going to need trustworthy employees to help you meet the demand of your customers. One common mistake made by beginning entrepreneurs is that they are too lax in their hiring practices.
Employees are the heartbeat of the company, they are the ones that your customers interact with; it is of the utmost importance that the people who work for you make your company look as great as it is. Weeding out the mess to get the best can be as simple as careful resume reviewing, running background checks on prospective employees, and giving them a marijuana blood test to make sure that you have employees that will consistently be able to put their best face forward, because they are the face of your business.
In conclusion, even though prospects may seem dim for startup businesses, your business does not have to be in the 20% that fall in the first year, or the 50% that close permanently by year five. Value your products, plan properly, and hire the creme de la creme, and your startup will be one of the success stories.
