When starting a small business, new entrepreneurs with no experience in finance, management, or investment tend to make many mistakes. Some wrong decisions can be analyzed and corrected quickly for the better but sometimes mistakes are so fatal that they can lead to a partial loss of income and other times even to bankruptcy.
Inexperienced business owners sometimes mistakenly believe that by choosing the most profitable small businesses to start, they are guaranteed success. As experience and statistics show, only 3% of startups with minimal investment become profitable and successful. Even at the stage of planning their own business, an individual entrepreneur must assess all the risks and analyze the mistakes of their many competitors.
The Most Common Mistakes in Business Planning
It is not uncommon for major errors and errors of judgment to manifest themselves as early as the planning stage. Before starting work, a new entrepreneur can make major mistakes that can significantly slow down the development of the business or make it unprofitable.
Misjudgments and Misconceptions
This mistake is made by almost all individual entrepreneurs who have no experience in starting a business. Counting on fast and easy money, a person quickly gives up when the actual income does not meet expectations. A few simple truths and rules should be considered. Being aware of them at the stage of planning your own business will allow you to stay afloat for years to come:
According to statistics, the break-even point of a company comes in 6 to 24 months. To put it simply, it will take more than one month from the moment a startup is launched to the moment it reaches profitability.
The return on any investment is considered optimal if the business fully recovers the investment within 5 to 10 years. Given the need for regular upgrading and scaling of the company, the return on investment takes up to 10 years.
A small business always requires a huge investment of time. If we consider the minimum budget for the start-up, often the entrepreneur himself takes on the duties of director, accountant, manager, and logistics expert. You will have to work hard and diligently until you hire proven and reliable employees for your company.
It is always necessary to come up with new methods to attract the target audience and lure customers from competing companies. Even choosing the easiest small businesses to start up, an entrepreneur faces a lack of customers, insufficiently qualified employees, and unprofessional partners. Everything has to be tested in practice until the operating mechanism is fully established.
You shouldn't expect quick and easy money when launching any startup.
No Business Plan
Big businessmen, billionaires, and celebrities who have made a fortune in their businesses often argue that there is no need to make a business plan to start a business from scratch. In practice, their words apply only when development, selection of personnel and premises, outsourcing, and legal and accounting support are done by professionals. Although even an unlimited infusion of funds cannot guarantee a return on investment.
Given the limited budget, you should not count on luck. It is necessary to calculate all figures taking into account the minimum level of income and maximum expenses. Since new entrepreneurs tend to underestimate their expenses, "forgetting" to take into account rent, advertising, and taxes, the real figures after opening a business can be upsetting for the inexperienced business owner. A business plan is necessary, and it is not primarily needed by banks or partners but rather by the individual entrepreneur.
It's essential to be fully ready for all challenges before you even officially start your business. Entrepreneurs work closely with Tax Preparation Services to ensure they are following tax laws and avoid any penalties or fines. Additionally, it's essential to have a proper understanding of legal requirements and regulations, as well as obtaining necessary permits and licenses. The same goes for marketing and advertising strategies, financing options, and operational planning.
Failure to Delegate Work
The only way to avoid burnout during long and intense work is to delegate job responsibilities. The sooner a business owner learns how to distribute duties among employees, minimizing his/her physical involvement in the work process, the sooner the company will reach a new level of sales. It makes sense to spend that free time on useful new acquaintances, market analysis, budget planning, or developing scaling ideas.
For example, having someone focused solely on finances can help prevent financial mistakes and ensure the business remains profitable. Company owners often google "accountants for small business near me" to find reliable and experienced professionals who can take care of this aspect of the business. Delegating work to experts in their respective fields can save time, energy, and resources for the entrepreneur, allowing them to focus on more critical aspects of running a successful business.
Doing everything yourself not only complicates and slows down the work progress but also significantly slows down the development of the company. Sometimes, an extra couple of hours of rest can bring a fresh idea or fill with strength for upcoming big events. It is recommended to make your work as easy as possible, to find a way to relax, for example, by playing no minimum deposit real money casino, which will enable you to satisfy a number of your standard needs. Online minimum deposit casino offers their services mostly for entertainment and to provide additional income opportunities.
Lack of Ambitions
Regardless of the field of activity and the size of the business, scaling plays a huge role in stable development. Having established a profitable enterprise, delegated responsibilities, and hired a competent manager, business owners without experience in company development absolutely forget about the necessity of scaling. The lack of ambition is often explained by a fear of compromising the operations of an asset that consistently generates revenue. However, in practical terms, insufficient investments in one's own business and unwillingness to develop it leads to a loss of interest among the target audience, and, as a consequence, to the unprofitability of the company.
According to statistics, the withdrawal of entrepreneurs from small businesses has only a few reasons:
The unprofitability of the business - 74%.
Retirement of the owner - 3%.
Lack of financing - 7%.
Planned withdrawal, transition to a medium-sized business, or opening a legal entity - <1%.
Sale of business - 4%.
Bureaucracy - 3%.
Personal reasons - 3%.
Accidental - 5%.
Statistics show that it is the negative profitability of the business that is the main reason for its liquidation. In order not to become one of the subjects of such unpleasant statistics, you should consider all possible development plans and not forget about the appropriate communication with customers.
Working with Target Audience
Business owners without experience in developing a business from scratch rarely think about the category of citizens to whom they will offer their services and products. In fact, targeting your audience remains one of the most important aspects of planning. You need to understand who will buy goods and services from you, who they will do purchases for, what these people are by occupation, how much they earn, and how much they are willing to spend on your products.
Target Audience Analysis
In large companies, marketers who know what influences a person's desire to buy a particular product are responsible for interacting with potential customers. Considering the size of the startup, you will have to analyze the target audience yourself. In order to create the most interesting offer to the customer, a number of important parameters need to be taken into account and some essential actions have to be performed for this purpose:
determine demographic parameters and attributes, identify key features of the nature and behavior of a person from a particular area;
to identify the client's needs for certain information and its type, as well as to find the most effective ways to deliver this information to the consumer;
to find out the interests, hobbies, and key habits of your target audience, to find out their family status;
to figure out the education, field of activity, average income, and the amount of spending that the customers are willing to spend for your products or services;
find the factor that influences the decision to buy or refuse, and identify the weak sides of the client and the area of pressure, such as family, animals, ambitions, or hobbies.
Learning how to analyze a buyer group for your business is a challenging task. Understanding basic information about your target customer will come with time but the sooner you learn how to get the most reliable data, the sooner you can build the right, aggressive marketing with the most effective methods of influence.
You can analyze your target audience by parsing personal data. For example, selling your product through social networks or filling out questionnaires on your website will enable you to learn more about your customers, while ensuring the first purchase or an increase in the average check in the shortest possible time.
