The business world has no sympathy for ill-prepared, rookie entrepreneurs. The desire for independence and more money aren't enough to guarantee success in business, and it's always been that way. Many factors contribute to the failure of a business and they're all intertwined. Entrepreneurs who fail to recognize and correct these problems will not last. To be a winner and to thrive, avoid these catastrophic mistakes.
No Concrete Business Plan
This is a map all new business owners need to show them where they're going, and how they will get to where they want to be. The plan will force a person to look at all aspects of the venture, i.e. marketing, distribution, sales, promotional plans, advertising, choosing the markets the business will and will not target, etc. By not having a tangible structure, business owners can't anticipate problems or formulate solutions. Simply opening the doors and making hasty decisions will lead the business into oblivion.
Trying to Handle Complex Jobs Without Experience
Business owners who try to exert influence in areas where they have little expertise will run into trouble. First timers who jump in without specialized knowledge of marketing, sales, accounting, public relations, transportation or designing websites won't take the business very far. Another mistake is failing to understand the buying habits of customers, which tend to change frequently. Successful entrepreneurs will hire people with the right qualifications to manage the nuts and bolts of a business.
A Business with a Bad Location
There is a direct correlation between the physical location of a business and customers' buying decisions. It has to be in a place where everyone can see it. It's no coincidence that fast food outlets are often situated near major highways. New business owners fail because they've set up shop in the wrong place, in which customers either don't want the product/service or are loyal to somebody else.
Refusing to Adapt to the Changing Marketplace
Business owners must be keen to anticipate new trends and adapt to them. Those who don't will lose customers to the competition. The advent of technology has altered the playing field and new business owners must be open to new ideas and willing to experiment. Customer demands never stay the same, and it's unwise to assume that they won't search for something better down the line.
Lack of People Skills
Customers may not be right all the time, but they are the lifeblood of any business. Too often, there is an us and them mentality that pervades many businesses, big and small. Staff who are openly hostile with customers will do irreparable harm to the future of a business. To avoid alienating the customers offer a full refund with no questions asked if they aren't satisfied with the product or service, and make sure the staff uses tact and discretion in these situations. Be diplomatic when dealing with erratic suppliers and distributors.
Greed and Impatience
Great businesspeople may have everything in place, but want nothing else other than to make some easy money. This causes them to expand too quickly and make bad decisions. Before they know it, they're teetering on the edge of a cliff.
Even if a business owner makes none of these mistakes, a company can still fail. Perhaps six months down the road the money runs out, or the entrepreneur based all of the business decisions on the suggestions of family members and friends. These individuals will rarely give objective advice. At other times, life gets in the way and events like relationship troubles and unexpected illnesses can replace moments of clear thinking with extreme stress.
Scott Hayden - Since joining Suite101 in early 2007, I've contributed articles about travel, history and health. My speciality is writing about workplace ...
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