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Friday, June 25, 2010

New Small Businesses Owners Faced These Common Mistakes

Starting a new business is challenging in many ways and first-time entrepreneurs often make mistakes that bring the venture to an end. Avoiding some of the most common mistakes made by small business rookies can help a company's chances of survival in a competitive marketplace.

Not Enough Cash

New business owners are typically excited about their new adventure and are often a bit too hasty to get started, even when money is short. Either through poor planning or the simple desire to get the doors open quickly, the expense of running the business becomes more than the cash flow will allow, resulting in a short-lived business. New business owners should generally have enough cash on hand to survive for three to six months even if the business makes no profit during that time.

Thinking Too Small

Some new business owners tend to think of themselves as small-time. Even if your business is just beginning and has a small staff, don't make the mistake of assuming you're too small to deal with the big clients. If you want to compete with larger companies, be willing to go after the same clients that they do. It's also a mistake to talk about the company as "brand new" or "very small" when other adjectives will do more to improve the image. Instead, use words like "boutique" or "specialty" shop to make your size feel like an advantage rather than a drawback.

Market Research

A great idea is only great if there are consumers to buy the goods or services. Don't assume you have a surefire business idea without doing market research. Slow growth might not be a reflection on your business, but it might mean that the community has no demand for what your business offers. Market research should include a detailed investigation into the area the business will serve. Find out if other businesses offer similar products or services and note how viable those businesses appear. Your research may include simply getting out into the community and talking to people about the needs of the area and whether people are receptive to your idea. Also check area demographics to determine if there are many people that your products or services will appeal to.

Doing Everything Yourself

n the beginning days of your business you'll likely handle many of the necessary daily tasks. Having the money to hire ample staff is a luxury to most small business owners during the start-up phase. Don't continue this trend after your business has grown. Eventually there will be too much on your plate and you'll become inefficient at the daily tasks and the quality of the service provided will suffer for it. This can drive away customers and do irreparable harm to the business. Look at your finances carefully to determine much you can afford to spend on labor and still remain profitable. Growing the business in this way is more important that making more money early on because it will lead to larger profits in the future. Consider hiring employees to handle some administrative or production duties, or contract a payroll service or a bookkeeper to take care of some finances.

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