There’s that statistic that people love to quote about something like 80% of new businesses failing within the first year of operation. I cannot tell you if that stat is accurate for Zimbabwe but it’s worth considering.. Ever wondered why? Well, we’ve scoured through new business problems to find new business mistakes that lead to business failure. It is important to take heed of these in your own business to remedy them as soon as possible if they are present.
Trying to do everything alone
This is a hard one to deal with especially with the notions we have been continually reiterated that we should strive for our own businesses as it is the only way to secure our financial present and futures. It creates a paradigm in which your business is your own and your responsibility. That would be great if you were a master of every function your business carries out but you are not. And that’s ok. Collaborate, hire, use freelancers and third-party providers where possible. You get to focus on the critical parts that your expertise is required and the rest of the show goes on.
The location has always been important but the world of online commerce has brought a new dimension to that. While you will hear no argument from me about the support structures for eCommerce not being quite ready yet in Zimbabwe. That said clothing retailer Edgar’s is now playing catch up by trying to sell via WhatsApp. The shift was made from store visits to online initiated buying long before coronavirus or lockdown where words known to us. This is really about understanding your customer. Where did they go before buying from you? Where do they like to be sold things? Where do they think about buying what you’re selling?
I’m evidently a fan of niche markets and even niche businesses but there’s a danger in targeting a niche that is too small. It’s not complicated, you need to have enough customers, a critical mass if you will, to keep the business viable. If you focus on a niche that is too small you may have trouble reaching critical mass and therefore viability. This problem rears its ugly head especially when your product is generic. Small niches tend to pay higher for bespoke products but if you are pushing something generic you need to make sure the niche you are serving is big enough.
Derivative ideas are ideas that do more than borrow from what is already they, they are based on existing ideas and usually present small or incremental changes to the way things are done. While this is the way most ideas happen what dooms derivative ideas is that they do not offer enough of an improvement in the product to warrant behaviour change from customers of the original product. In my experience shaving with razors has the best lesson for this. Many, many years ago we used to share with single razors. Then someone decided to have q double blade razors. Then 3, then 5 and even 7! The trouble is, adding razors isn’t quite the answer. I have found 2 razors as the most you will ever need but a single razor is perfect in my opinion. This may not hold for everyone but I hope it illustrates the shortfall of derivative ideas.
Arguing with the market
I have so many comical examples of this that I experienced up close but I will not delve into those and embarrass people. What I will say is that this practice is more common than we might initially think. Many people start their businesses with passion and zeal, treating their business like a child. Protecting the business can become more important than allowing the business to go through the things it needs to go through to grow. Many people will refuse advice that can correct their businesses when it comes from friends, family and peers. To refuse such advice when it comes from customers is suicide. Develop a policy of listening to your customers. This is not advising you to bend to every customer whim but rather to the needs of your market.
Earlier in the article, we discussed that trying to do everything alone is a mistake that ends many businesses and we should look to collaborate, hire and work with others. Well, this is the other side of that coin. Again something I have witnessed up close. Hiring the wrong people is incredibly expensive. A bad hire can cost you three times as much as you are supposed to spend. The cost of hiring, the loss of income, fixing the mistake and hiring the correct person again. Time is always a constraint but do not be in a position where you are in such a rush to hire that you wind up with the wrong hire. Take your time and find the right fit for the job in terms of skills, experience and personality. This is one advantage Zimbabwe has for business owners, the talent pool seeking employment is huge.
We will stop there for today. There are so many mistakes that kill new businesses I will have to follow up this article with another.