Is This Business Idea a Goer Then?
This may seem like a strange title, but I have lost count of the number of new starts I have seen that ask me this question. Even though I am wearing normal professional attire and not a long beaded skirt and head scarf and although I am not peering into a spherical glass object, they still seem to think I have miraculous powers of being able to see into their future.
I also get asked by more sensible individuals, what is it that makes the difference between a successful business and one that fails? Here is a checklist of the most common habits that can lead to the downfall of a business. These are not cast in stone and many businesses can be successful in spite of these traits. But if you are looking for common reasons then this list is indicative of those:
When starting a business, or even buying an existing one, it is easy to get carried away on a dream of no more work, no more bosses, come and go as you please and bask in the glory of finally being an entrepreneur. It is easy to be overly enthusiastic in the early phases and don the proverbial rose-tinted spectacles. This is not particularly a bad thing. I am wholly supportive of anyone wanting to become self employed and being passionate is important.
The reason I have written this blog is that there is a widely held belief that there is a magic formula with enterprise. It is thought that if you find this holy grail then you are guaranteed success, if it eludes you, then you fail. This is not the case.
I do not like the word ‘failure’ it is a very final and negative term.
It is not as cut and dried as you either succeed or you fail. There are many factors as to why businesses close their doors. I believe it is having shaky foundations from the start, such as taking on too much debt or overhead. Or not acting quickly enough when problems are arising.
As long as there is a market for your product or service, as long as people are prepared to pay for what you do and regularly, there is no reason why you cannot trade for many years at a healthy profit.
If you keep your feet on the ground, your expectations are realistic and your motives are authentic, you are more likely to have staying power. If your ambition is to just impress your peers and look good then you will take decisions for the wrong reasons. If you aspire to earning a living, creating jobs through organic growth and realise businesses take time to build and require dedication, long hours and hard work, you are more likely to give it a real go.
Here is a checklist of common errors that lead to shaky foundations:
- Not carrying out any market research, assuming that because you love your product/service, so will everyone else
- Many famous entrepreneurs boast that they didn’t write a business plan when starting out and ‘look at them now!’ mm yes taking lucrative TV contracts to supplement their income. I will blog about business plans separately. However, even if you don’t actually write one, you still need to plan for business, why? You may need funding and funders want to know what you are doing; . Also to check viability, can you earn enough profit? Is there actually a market for you?
- Not seeking advice – get proper advice to ensure you will be trading legally, your local chamber of commerce or enterprise agency, Kingfisher Marketing and various online resources can help
- Not learning about book keeping and relying on others to do this – this is a very trusting stance to take, even if your partner is going to take the strain away, it is still important you understand this side of the business because it will impact on decisions you make, they will potentially be bad ones if you are in the dark
- Not advertising regularly – if no one has heard of you how can they buy from you?
- Not keeping up to date with market trends or your skills, losing touch with your industry and going stale with your knowledge makes you irrelevant and customers will flee to competitors
- Credit control system – make sure your cash flow stays healthy
These are not the only reasons.
I would say that the biggest contributing factor to resilience is the mind-set of the business owner(s). Are you determined to make it work? Do you persevere in the first 6-12 months when you feel you are getting nowhere? Do you carry on believing in your product/service because you know there is a market and that your offer is good, it just takes time? Do you act professionally at all times? Do you represent your brand well and exude quality and reliability? These are crucial factors when in business and are more likely to guarantee profitable, long term trading.
There is no such thing as get rich quick. There are no shortcuts. It is get quite well off over time, through hard work and determination and self belief.
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