You’ll see many successful entrepreneurs and business owners talk about their road to success in interviews, on their professional profiles, and in the media in general. Rarely will you find a business owner talking that openly about their previous failures, of which there might as well be several, not just one. They’ll talk about what helped them reach their heights and share their finest tips on how you can do the same. However, sometimes it’s wiser to learn from the mistakes of others than to only focus on their greatest triumphs. After all, most of these victories were built on their previous failures.
So, let’s take a closer look at some of the more common pitfalls of entrepreneurship, and how you can overcome them, or preferably, prevent them while you’re building your own entrepreneurial empire. Of course, they are certainly not the only ones you’ll encounter, so make sure you learn as much as you can about the risks your specific niche comes with, so as to brace yourself properly for its challenges.
Not securing your cash flow
Unlike the entire budget for funding your marketing campaigns, brand development, and overall business strategizing, cash flow is the “live” money you need to have for everyday operations. It’s the money you pay your suppliers and your manufacturers, the money your customers pay for your products or services, that allows your company to stay liquid. In your rush to impress your customers or build relationships with suppliers, you might fail to negotiate a deal that enables you a steady flow of cash for your daily operations.
Now, in addition to traditional ways to secure cash flow, you can also look into other options such as invoice factoring that enable you to receive a regular influx of cash, and give your customers a more flexible timeframe for their payments. This prevents disruptions in running your business and allows you to invest the money in the most relevant sectors of business development.
Failing to understand your business model
Much like with everything else in life, there is no such thing as a one-size-fits-all for your business endeavours. If you’ve spoken to another entrepreneur and discovered that their specific model works wonders for them, don’t be too quick to assume that the same one will be optimal for your professional goals. Understanding, for example, what a franchise business definition entails can mean the difference between choosing a profitable franchise with a strong support system or investing in a less optimal opportunity. In the same manner, knowing what it takes to become a startup owner can help you establish if this is a good match for your business idea.
The former model allows you to work under an established brand and use the help and support from the management every step of the way. The latter, on the other hand, comes with that innovative excitement of delivering a unique solution to your customers’ issues. A partnership, on the other hand, could be the best way forward for you, especially if you cannot finance a solo endeavour at this point in time. Do your homework before you settle for a model, and talk to entrepreneurs with similar experiences to get a first-hand glimpse of each one.
Not creating a market-specific product
Some entrepreneurs simply want to please everyone. The truth is, you cannot possibly do that and be able to make your brand stand out in this beehive of a business crowd. Differentiating your brand by settling on a specific set of services or products you can offer is still a pivotal step in making sure you aren’t a jack of all trades in your industry. This also raises doubts when it comes to your expertise and experience, and reduces the credibility of your brand for the long haul. If your goal is to solve a particular problem, make sure you declare your goals in every aspect of your business.
Too wide of a target audience is as harmful as sticking to a very small pool of interested people. You can always expand your services or products once you earn your market’s trust for your initial offers. Until that day comes, make sure that you know precisely who your target customers are, what they want, and how you can deliver an exceptional product or service to help them enjoy their lives more.
Not ensuring proper funding
Unlike cash flow, funding problems are ones that can prevent you from either starting your business altogether, or they can cut your entrepreneurial journey short once you run out of funds to finance your strategy and service. Do you need engineers and developers as members of your staff? Can you pay for your office space? What about marketing? Before you even start talking to your potential crew, you need to make sure that there’s enough financial backing to your idea.
Go to investors, banks, and friends and family if need be, but talk to them with a strategic approach, a forecast for your profit, and plenty of ideas and plans as to how to execute your strategies to succeed. Every solid innovation and even powerful franchises require that initial capital that will help you launch your business. Do your research to see what sort of investments will be necessary to fund your idea, and of course, remember to build a contingency funding plan just in case the first one falls through.
You are bound to make mistakes on your way to building a successful business. However, make sure to prevent some of these most common and most harmful errors of judgement that might drive the entire project to the ground.
Keith Coppersmith is a business and marketing expert who has experienced both the rise and fall of many businesses. As a regular contributor at BizzmarkBlog, he enjoys writing and providing insight of the marketing industry based on both practice and theory.