By Eileen O’Shanassy
If you decide to start a business, you know you have a lot of work ahead of you. While you may have a good idea for a business, putting a plan into action is often a more daunting task. Research shows a majority of startups don’t make it past five years, with some failing within the first. While there might be a number of reasons behind each failure, entrepreneurs should know how to avoid the most common pitfalls. There is no textbook guide to run a business, but there are a few guidelines to consider before starting out.
Identify Your Market
Your clients are the number one priority for your business and you should quickly identify who buys from them and their location. By recognizing your customer, you will be better off in streamlining your strategies and plans to the market. It’s also advisable for businesses to identify the trends and preference of its customers. The more information you have about your prospective customers, the better you are placed to target and satisfy their needs and wants.
The heart of any business requires expert planning. From finances, human resources, production, to allocation of tasks, planning is a critical process in sustaining and running a business. Plan on matters of investment, marketing, and training while carefully budgeting the incomes and expenses within the company. It may feel like an uphill task to do all the planning, but you have the option of hiring professional help in some cases. If not, you can decide to get the skills yourself and take matters into your own hands. Enroll in a business management degree course or join a management program to gain more business, organization, or related skills. A legitimate business plan is a great blueprint to help get investors onboard and help fund your startup.
Manage Your Cash Flow
Most new businesses never get through their first year due to poor money handling. Finances are the core of the firm, and more often entrepreneurs end up mismanaging the cash reserves. Good advice in your first year of business would be not to offer credit. If you are selling, make it cash up front only, since giving your customers credit is a sure way to sink your company. While it may appear like a bold move, it is essential to keep the incomes and expenses of the firm flowing and not experiencing shortages.
Identify Your Competition
You don’t expect to win in a contest if you don’t know who you are up against in the game. While you may overlook this, competitors are where your potential customers are currently buying their products. Study your competitors by conducting an extensive market research to identify their prices, products services. It will go a long way in identifying gaps that may exist within the trade and gain an advantage over your competitors. You also get to learn techniques employed by other companies in order to dominate the market. It is merely a learning curve that never ends.
While these are just the initial steps of establishing your new business, there is a lot more to do once you get through this phase. This should not scare you, as even the large corporations had to start somewhere. Apart from that, for your business to seem legitimate within the first year, professional establishment should be part of your plans. Whether it is having an actual location, a bank account, or a line of credit, these factors will not only grow the business but establish its legitimacy.
Eileen O’Shanassy is a freelance writer and blogger based out of Flagstaff, AZ. She writes on a variety of topics and loves to research and write. She enjoys baking, biking, and kayaking. Check out her Twitter @eileenoshanassy.