Even the best business idea can fail if you don’t follow the right business practices. Often, when a business fails, the owner didn’t have enough business experience—and didn’t seek advice. If you are new to the business world, you can plan to avoid common pitfalls by doing the following things right.
Know your market
Develop a deep understanding of your customers, what they need, and how much they’re willing to pay for it. Not doing so can lead to mistakes in location, pricing, advertising, and other areas. That’s why it’s best to start with a market analysis.
Plan, plan, plan
Good planning is not only the key to launching your business, but to keeping it running smoothly. Without planning, you might not see either threats or opportunities coming.
Create a business plan and, every so often, sit down and revise it. This will help you grow your business into what you want it to be.
Plan for the worst, hope for the best
Budget for your expenses to be higher than you hope, and your income to be lower. Build in some room for error. Set aside money in case an opportunity comes along. But also create an emergency fund for rough patches that you may not see coming.
Manage money carefully
Keep plenty of cash on hand and avoid buying more inventory than you need. If you overstock your product, you might not have enough money each month to buy supplies and pay employees.
Be patient: Grow slowly
Growth is your goal, but it can be hard to manage when you can’t predict it or you go too fast. For example, your new business may be stretched trying to cope with a sudden rush of orders, resulting in delays or quality issues—and lost customers. Try to grow carefully.
A truly successful business is usually an all-or-nothing project. It takes a lot of time and energy. If you can’t commit to it fully, you may find it hard to compete with those who can.
Stay a step ahead
Stay open to ways to improve your products or services. Keep in touch with your customer base. Watch market trends. Be aware of what your competitors are doing. Staying on top of trends, customers, and competitors can help you stay a step ahead.
Most things you do in life are easier the second time, and starting a business is the same. There’s no way around being new the first time, but there is a way to avoid rookie mistakes: learn from those who’ve gone before you.
You can do this by networking. Join business associations and connect with colleagues who can serve as mentors. Invite successful people out for coffee or lunch to see if they will share their knowledge with you.
You could also spend some time working in the type of business you’d like to start. For example, if you want to open a restaurant, try working in one as a server or manager first.
Pay attention to rivals
Business is about finding and keeping your customers—and that means ensuring other businesses don’t lure them away. Stay honest. Being known for your integrity will serve you well in the long run.
That said, remember that your competitors are, well, your competition. Don’t expect kindness from them.
Find and keep good workers
This can be one of the toughest, most time-consuming parts of running a business. Read about trends in hiring, such as popular perks and benefits. Know what keeps your staff happy. Train them well, treat them with respect, and be clear about what you expect.
These are ways to avoid some of the most common pitfalls in business, but there may be others unique to your industry. Consult other sources for more business tips about the field you work in.