The rise in start-ups across the globe due to the onset of the pandemic is prominent. The hike in new businesses over the past two years is attributed to a large percentage of the workforce getting laid off because of COVID-19. With an increasing number of people working on their own start-ups, we are also presented with an exponential increase in the anecdotes we can learn from to avoid making these mistakes in our own ventures!
Neglection of a business plan: Probably the most highlighted and emphasized business mistake to avoid — and for good reason — the neglection of drafting a business plan before kicking off a startup. This can prove to be disastrous for a new business. Business plans often aid in providing clarity about the organization, its goals, achievements, and future sales curve. It indicates possible costs, the exact target market, and how much of the business’s product or service it will expect to sell. Business plans are not only essential to owners of the business itself, but also to banks and other financial sources that managers might be looking for financial aid from. Remember, failing to make a business plan means planning for failure!
The setting of wrong prices: The price of a business’s product or service is one of the most important factors deciding their success since price is a directly influential factor determining demand. Contrary to popular belief, the decision of price cannot only be done by looking at the competition’s price and setting a lower rate. There are multiple different mechanisms of pricing; competitive, promotional, and cost-plus, to name a few. Depending on the product of the business, the pricing strategy and a suitable rate must be picked with careful consideration. If a product’s price is too low, it would encourage demand and sales but give the illusion of lower quality. On the other hand, if a product’s pricing is too high, better quality would be assumed but the market would narrow down to a niche one and decrease the number of potential customers.
Launching products / services too quickly: The thrill and excitement of entrepreneurs due to a quickly developing start-up often results in them launching their product or service too early. CEOs and the rest of their staff need to have other aspects of their backstage product launch streamlined — like communication, contracts, delivery service, payment processes, etc all while making sure their outflows don’t increase too much and they are still on track with their marketing strategy. A product launch implemented too early would lead to disreputable fumbling within the workings of the business and earn the start-up an unprofessional name.
Failure to understand the market: A product’s target audience has the power to make or break the success of its launch. Market research is one of the most critical components to ensure a profitable product, and must be carried out without missing important information the product development team might need. Each market would have different needs and wants, and entering one makes considering the competition inevitable. Lack of competition would mean a greater market share for the business, and to achieve that the research team must be successful in finding a gap in the market. No matter how good a product is, shortfalls in understanding the appropriate market would most certainly lead to a short and difficult product life cycle.
Underestimating the hardships: A large percentage of start-up owners today are motivated by positive anecdotes of previously successful new businesses; be it business blogs, articles, or stories from word of mouth. Assuming that the journey from a start-up to a successful business is one of ease, jolly and glamor is one of the most dangerous mistakes someone starting a business can make. Every business launch takes a tremendous amount of work, concentration, toil, and sacrifices. Narratives of start-up journeys often glorify the triumphs and undermine the misfires. Failure is definitive and success is determined by one’s response to failure. Businesses are not in a permanent honeymoon period; most definitely not in the beginning stages.