According to the US Bureau of Labor Statistics, 20% of new businesses fail within the first two years, and almost half of them do not make it past their fifth year. Being aware of some of the common mistakes entrepreneurs make in their first years of running a new business can not only increase your chances of success but also save you time and money. Below are some top tips for new business owners that will help you avoid the pitfalls of starting a new business.
In today’s digital age, any successful business owner needs to take advantage of technology with regards to matters such as marketing, customer communications, supply chain management and social media. There are many logistics to running a new business that can be improved and streamlined with the help of technology. Making use of intelligent software tools can enhance your business’ efficiency, productivity and ultimately its profitability while a lack of investment in such tools can cause your business to lag behind its competitors. Whether it is virtual accounting and bookkeeping software or online tools that allow you to automate your payment transactions, utilising technology can help your business processes run smoothly and quickly. Knowing how to choose the right software for your business will require a little research but some of the common software tools include:
- Customer relationship management (CRM)
- Billing software
- Payment processing software
- Time-tracking software
- Email marketing software
No Business Plan
Putting together a business plan that clearly defines your business objectives can help you stay consistent in your efforts, improve your decision-making, and serve as a benchmark against which to measure your progress. Without a strategy in place, it can be difficult to identify how well your business is performing and to determine which areas you need to focus on or improve.
Investors or lenders often require a business plan before they will fund a business, so it is advisable to have such a document readily available that communicates your business vision as well as details the fundamentals of your financial forecasting and profitability.
Some of the main components of a business plan include a budget, financial plan, marketing strategy and analysis, sales forecast and key performance indicators (KPIs) which show whether your business is on track to meet its goals.
Inadequate Market Research
Before launching your service or product it is essential to take time to understand your market by conducting research. Knowing who your prospective customers are will allow you to direct your marketing efforts to the correct target audience and will make more efficient use of your marketing budget as well as increase the chances of your product or service being purchased.
To stay current, it is important to continually get feedback from your current and prospective customers base and not just when you are launching. With these three steps under your belt, you are sure to give your business the greatest chance of success.