After writing about new business mistakes in a previous article it was evident that not all of them had been covered. So a follow-up article explaining more new business mistakes and offering solutions where possible was necessary, to say the least. The mistakes in this article will follow the same themes as the previous article; looking at mistakes that can bring about the premature death of new businesses. You may identify with some of these mistakes in your current business set up and hopefully find remedies to them too.
The concept of a business operating on the wrong platform is not that easy to explain but we can use the analogy of selling ice cream in very cold winter to bring it down to terms we can understand. Customers are always right in the sense that arguing with the market will almost always lead to your business losing. To use a practical example the first thing sold online was Pizza, in 1994. It just so happens the first thing bought with cryptocurrency (Bitcoin) was also a pizza. This is because pizza has been open to the remote selling and delivery system. Legend has it the first pizza was delivered in 1889! The platform is just as, if not more important than the product.
Timing is regarded by many as the most important factor in success. Many products and businesses have launched either too soon, when the market is not ready for the product, or too late when the market has moved on from a product. My favourite Zimbabwean example of poor timing is TelOne which only woke up to the idea of making landline prepaid more than 10 years after mobile operators had adopted prepaid and everybody could now have a cellphone in their pocket. While that is an existing business with many other product lines were it a new business with that as their marquee product it would’ve been the end. With timing, your threats usually come from outside your immediate market and industry.
No specific user
I speak to a lot of people starting or running new businesses and this tends to be a bone of contention when I am talking to them about customers. When I ask “who is your customer” answers such as “everyone” and “anyone” are major red flags. If you do not know your customer how do you know the platform to sell to them on? How do you know if the timing is right or not? How do you know that they do not already have a solution to the problem you want to solve? Understanding buyer personas can help you overcome this problem if it is one you identify with.
Not enough Capital
This may be stating the obvious but lack of capital really kills a lot of new businesses. I’m not against bootstrapping at all, it is a viable way to start a business but it comes with a lot of considerations that people are not always aware of. Working capital (which you can read here to understand more about) is the type of capital that many new businesses tend to struggle with. A good understanding of working capital and business finance opportunities can help you out of this trap if you find yourself in it.
Overspending is just as much a personal finance problem as it is a business finance problem. In business finance, it is usually justified as a business expense and therefore mo amount can be too much when investing in business but the fact of the matter is it can be. The trap is either overspending on items we need but can get cheaper elsewhere or spending money on things the business can do very well without. Many things have become symbols of businesses but they do not necessarily contribute to the success of the business. You need to interrogate every expenditure for validity and develop a system that encourages you to find the best prices or offers.
An additional 5 afflictions for you to ponder about in your business. Are any of these familiar to you?