Mistakes when starting your business

So far we have talked about the steps you should take to start your new venture, from choosing the name of this, to how to start your website to market your products or services. In this chapter I will expose the main mistakes that entrepreneurs make when forming their new business, so you can avoid them at all costs. As I said before, it is important to have passion in business, but you can't let it blind you completely and prevent you from making the right moves to be successful.

According to Forbes magazine only 25% of startups make it to the first two years. This is so you can see how difficult it is to get your small business off the ground, where only a quarter make it past that time frame. In order for you to avoid this fate, here are the main mistakes that most new businesses make when starting up.

Miscalculation of expenses

One of the most common mistakes of startup businesses is not properly calculating and controlling their expenses and income. This disorganization can bankrupt any business. You have to keep in mind that, even if your product is very good and of high quality, and in high demand, a poor management of expenses and income can quickly lead you to bankruptcy.

Before starting your business you should consider the expenses for at least the first two years, taking into account the fixed expenses, setting aside a fund for unforeseen expenses and another one for larger expenses. You should plan how to pay those expenses that you cannot predict in case you do not generate income in that first year. For example, in your projection of fixed and variable expenses, you establish the budget month by month and inflate it between 2 and 5% for unforeseen expenses, this way you will always have money for those contingencies that can affect you greatly. And believe me, you are going to have expenses that you could not have imagined, so it is always wise to have that safety net.

This foresight and planning ahead will give you a sense of security, so that when you have adversities, you can make decisions in time and without rushing into the quickest and riskiest solutions. Experts agree that a company with a prudent and well thought out business plan has up to 30% more possibilities of growing its sales and expanding its business.

Not knowing your customer

I have already touched on this aspect in previous points, so if you have listened so far you should know that knowing who your ideal customer is and what they want is one of the best tools you have to advance your business. When you know who your customers or niche markets are you can better focus your products or services to better meet their specific needs.

If you don't know your target market well, you will attract everyone, even those who won't buy what you want to sell, this will make you an ineffective business and will exponentially increase your expenses.

Using again the example of the gym, let's say that your real target audience is people with children between 30 and 60 years old. You should not focus your marketing efforts on people below those ages, nor use complicated schedules for those customers and keep in mind that they have children and meet their expectations to keep them happy.

Do not stand out from the competition

If you want your business not to fail and grow progressively, you must have something that differentiates you from other businesses in your same market segment. Many entrepreneurs rely only on the quality and features of the product or service to give them value, but this is often not enough to attract customers.

For example, a company selling mobile devices that only focuses on the basic features of its product, the screen, the memory, the camera and other aspects that are common to all devices from different companies, fails to differentiate itself from the rest of the others that already offer the same.

But if instead, it focuses its promotional efforts on highlighting that this new device has a superior camera, more battery, a larger screen, it automatically stands out above the rest and attracts the attention of the customer who sees its product as of superior value.

That is why one of the first tasks you should do, as I mentioned before, is to know the particular value of your product or service and what distinguishes it from the competition.

Trying to make everything perfect

Trying to seek perfection is an impossible task, nothing is perfect and your company is no exception. You have to make peace with the fact that not everything will go your way and that mistakes happen, you just have to be prepared to face them and give them the best solution to keep the business moving forward. Expecting to launch a product or service that is 100% is a utopia that you should get out of your head right now, and trying to do so can hurt you, since you will delay the launch or you will invest more time and money in trying to perfect something that may not be perfect.

It is better to bring your product or service to market when it is not 100% and gradually perfect it, than to wait and stagnate and delay your projects that you do not consider perfect. Keep in mind that the market, needs and customers are constantly changing and no matter how hard you try you will not be able to fit everything for all aspects.

Do your market research and invest the time in getting a functional product or service to the market and then perfect it while you are generating profits. Sometimes trying to be perfect is more about the fear of not being successful, so I advise you that the best strategy is to do it and learn from the mistakes that are presented in the process.

Not paying attention to market trends

Paying attention to the new trends that will appear in the market is a vital step in making your business profitable. Not doing so is a mistake that many entrepreneurs make and it costs them a lot or they do it too late to mend it.

Let me give you the example of Kodak, the camera manufacturing company, once one of the most prestigious and prevalent in the market. When the digital era arrived, the company did not take this as a problem, since as I said they were one of the most prestigious and had the preference of customers. Of course the other companies did change and adapted to this new business model,