Entrepreneurship is a scary idea. We have heard so many stories of failure, and we do not want to be the next one. However, one of the best ways to achieve financial freedom is to have your own business that is successful and profitable. As a start-up, however, there are fundamental mistakes to avoid to help improve your success rate.
1. Have a Business That Brings Customer Value
The bottom line is that you want to earn money. All businesses exist for the same reason. However, your company will not succeed if you do not have any measurable value. Primarily, your product or service should be able to make your potential customers realize that they need you. In a nutshell, what is the problem that your business is trying to solve?
Some restaurants offer delivery, which solves an underlying problem for people who do not want to leave their houses. Some businesses provide services that many people find difficult to do, like landscaping or repairs. At the core, your company must exist because you have a solution to offer to people who have a problem.
2. Make Sure You Have Enough Capital in Cash
Business experts will tell you that the most common cause of failure is lack of funding. Most entrepreneurs make the mistake of thinking that for as long as they have enough cash to pay for the construction expenses, down payment and deposit for the rent, and equipment, that they should be all set. They believe that the customers’ purchases, based on their business projections, should be able to pay their business needs.
Reality does not work this way. Businesses need time to earn and build customer loyalty. Ideally, you should have enough cash to pay for your business’s bills for the next six months—this includes utilities, rent, salaries, and miscellaneous expenses, not including the money you need to spend for your family. This cash will come in handy at the first few months of operations where you do not have enough customers coming in.
3. Ensure That Your Business Has Investor Value
Many entrepreneurs think that the key to success is doing what you love and then the rest should follow. Doing what you love does not always equate to profitability. Whether you are operating as a single owner, partnership, or corporation, the business must bring financial value to the table. It cannot be a successful business if it is not earning an income.
Without investor value, there is no avenue for you to expand. Banks will not lend you money if you cannot prove that you are profitable, investors are likely to think the same. In short, your business cannot grow if you are not making a profit.
4. Create a Business That Has an Employee Value
Happy employees are productive employees. At the very least, employees must receive what they are legally entitled to, like minimum wage. They should also receive other government-mandated benefits such as social security, health benefits, and others.
Employees who do not receive fair compensation have a higher tendency to harbor negative sentiments about you. They will never become a part of your team and will not advance your business interests. If they are receiving what they are entitled to, or more than that, they will realize that their actions at work have a direct relationship with the success of your business and the security of their job. Thus, they become part your team promoting what is best for your company.
5. Prepare Business Processes for Standardization
Quality is an all-encompassing aspect of the business. You should have a manual to help your employees understand the standard operating procedures of your business so they can produce products or services that have minimal variation.
An excellent example of this is a recipe. Anyone in the kitchen who is adequately trained is less likely to make a mistake if there is a recipe to guide him to cook the same quality of food all the time with the same portion size. Processes include standardized accounting system, hiring process, inventory system, and other business practices that are done daily.
6. Be Relentless in Marketing
Marketing is the bloodline of your business. Do not rely on word of mouth as it can only get you so far. While it remains a timeless way to build relationships with customers, there are other ways people look for “word of mouth,” such as social media.
Today, you must use social media platforms to advertise your business. This allows you to expand your reach, show people what you offer, and have them take action about your ad, such as making an online purchase or calling you.
7. Know Your Competition and Their Weaknesses
You are not the only person selling whatever it is that you are selling. Or maybe, for now, you are. But it will not last long.
Competitors will rise, and you need to be prepared. You need to understand their weaknesses (high price, slow service, few choices) and learn from them. And what we mean by that is you need to take specific steps to ensure that you do not repeat their mistakes. Make sure that you are on top of the game and never get complacent.
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