Launching a new business can be risky and success is not always guaranteed. Businesses are most vulnerable to failure during the early stages of operation, with 20percent of new businesses folding up in their first year and 50percent within their first three years. These figures should not scare you, but rather prepare you for some of the challenges entrepreneurs face when starting a business. With hard work, effective planning and execution, a new business can be a great success. This article will dissect common business management errors and how they can be avoided and below are a few of them:
Failure to Plan
Business Leaders have two major responsibilities – to ensure the daily running of their business and to effectively plan its growth and sustainability. Future planning is crucial for taking advantage of opportunities and anticipating necessary actions for growth and success. Failure to plan however may result to lost opportunities and business failure in the long run. According to Marcelene Anderson, Strategic Planning Specialist of Raven Strategic Consulting, entrepreneurs sometimes fail to prepare for the future due to preoccupation with today. It is necessary to include short and long term goals in the running of a firm.
Selling to the wrong Market
While sales are important for the survival of any business, you must carefully identify your market. It is simply a waste of time and resources advertising your product or service to the wrong market. It is important for you to conduct adequate research on the target market to ensure they have a need for what you are offering before promoting your product or service.
Failure to carve a Niche
Many entrepreneurs think that getting a large market share is the likeliest path to success and fail to realize that carving a niche to fit distinctive prospects will make your business stand out. Occupying a niche means you may have absolute advantage over potential competitors since your products or services are customized to fit the specific needs of a target market that may not easily find alternatives.
To determine if a particular niche is right for you, ask yourself the following questions:
• Do I have an identifiable target population with similar interests and needs?
• Is the market large enough to support my business?
• Can I tailor my products, services, and business identity to address that market’s particular needs?
• Is my target market currently underserved?
• Can I reach out to my potential customers in a cost-effective manner?
Your niche will give your marketing efforts a natural, sharp focus and the more you specialize, the more your market will see increased value of your product or service.
Poor and inadequate market research
Research and planning are vital to ensure that your business idea is viable and that your pricing is both competitive in the marketplace and provides an adequate return. A common misconception is that entrepreneurs fail because they lack sufficient funding or did not put the right team in place. However, many fail because they have not spent enough time researching their business idea and its viability in the market. Lack of proper market research is a key problem for new businesses. It’s easy to get carried away with a business idea and set up a business without testing its viability. Accurate market data will help prevent over-optimistic forecasts.
Hiring the wrong staff
A large part of your new business’ success will be determined by the quality of people you recruit. Human capital is an investment and requires careful consideration. Ensuring that you hire high-caliber people with the right mix of skills is not an easy process but it is one that will help a business succeed substantially. As an employer, you much do adequate research on the skill set required for the job and conduct a fair and analytical interview for potential employees where they will have the opportunity to prove they are the best candidates for the job.
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