Many people’s dream is to become their own boss by starting a new business. While becoming an entrepreneur is a great aspiration to have, it is by no means easy. In fact, it’s one of the most difficult things you can do. 70 percent of businesses do not survive past the 10 year mark.
While there are many reasons why businesses fail, many of the biggest mistakes happen near the inception of the business. The entrepreneur did not have all of his or her bases covered. Below are some examples of mistakes you should be sure to avoid.
One of the biggest mistakes new businesses make is attempting to sell a product or service that consumers simply don’t want or care for. This mistake is often made because the proper research was never performed to determine whether or not a product idea is feasible in the actual market that exists. While performing such market research can be cumbersome and involves some expense, it’s absolutely necessary. If there is no conceivable demand for your product, you shouldn’t be going into business in the first place.
A second common mistake is not factoring the competition into your decision of whether or not to enter a given market. Just because consumers want your product does not mean they will buy it. That often occurs when other more established competitors already own huge slices of market share for your product category. It may simply be too difficult to edge your own new business into that tight crowded market. For example, the four largest fast food burger chains own 71.8 percent of that industry’s market share.
Starting and running a business in the United States is very much a legal act. Every aspect of your business will come under the scrutiny of a host of different laws and regulations. This includes laws at the local, state and federal level. It can be quite taxing as a newcomer.
If you want to become a business owner with a significant income, you will probably need to start a relationship with a lawyer to make sure everything you do with your company conforms to the large legal and regulatory burden. You may also end up needing different attorneys with different specialties. While retaining an attorney with experience in business law may be important, you may also need a car accident lawyer if your company runs a fleet of vehicles. Other concerns you may have to deal with include employment law, workplace safety regulations, the tax code, legal contracts, environmental laws and health regulations.
A Sturdy Business Plan
You should also never launch a business without a sturdy business plan to lay the groundwork for what you want to accomplish. Even if you are not seeking outside investment, creating a business plan that can actually work in the real world is vitally important. A survey suggested that the existence of a business plan can double a company’s chances for succeeding. It’s not hard to understand why this would be the case.
Of all the different elements of a business plan, the most important is certainly the model your business will use to create a profit. If your company can only operate at a loss, you may as well not even try. You must put a lot of thought, research and math work into this part of the plan. You need to be able to prove that your company can create a profit when things like raw materials, labor, utilities and more are taken into account.
Entrepreneurship is a dream many people have. However, many of the people that do start their own businesses end up failing. Part of the reason why is that they never really covered their bases in the first place. Before you launch your company, don’t ignore basic things like market research and drafting a proper business plan. If you do, it could come back to haunt you.
by: Kevin Faber