Starting a business can be exciting for an aspiring entrepreneur who has the drive to succeed. However, research shows that 20% of business startups often fail within a year with another 50% closing down in the next three years.
Despite the hard truth, this should not have a negative impact on individuals who want to make it big in their industry of choice. By avoiding the mistakes new entrepreneurs make, succeeding in an endeavor is attainable.
Here are the things you need to be aware of and keep away from:
Relying solely on a business idea without thorough research.
It’s true that passion is a great driving force for a business startup. However, not taking time to study if the service or product you plan to offer has a market can end up to low sales or even no sales at all. Find out what the demands of consumers are and choose one or two that you can deliver. Once you have the commodity or service in mind, ensure that your pricing is enough to earn you a profit.
Not being ready for the financial aspect.
Some entrepreneurs only come up with a starting capital without a contingency plan if something goes wrong along the way. It is so easy to be all positive that sales will pick up and the business can sustain itself after a year. However, not all businesses do. Having a projected cash flow for the next three years is important and so is building your cash reserves in times of unexpected challenges along the way.
Focusing in making sales and expanding too soon.
Case in point, you are a retailer of shoes and you order from suppliers. Being tempted to selling different designs and expanding on a second branch early on simply because sales are up might not be the best move. It is important to follow the trend and just order enough pairs. This will keep you debt from suppliers and unsold products.
These are just three of the numerous mistakes to look out for. With careful planning and a good business sense, you can increase your chances of thriving in the industry you plan to get into.