Recently released figures on the state of small businesses in Australia are alarming.
Of the 299,123 new business established during the 2008–09 financial year 76 per cent were still operating after one year of business, 61 percent after two years and only 51 per cent of businesses were still trading three years after opening.
It makes sense to do everything you can to give your business a better chance of being in that 51 per cent.
Here are some of the most common mistakes to avoid when starting a new business
1. Not having a plan
As the old saying goes, if you fail to plan then you plan to fail. A business plan needn’t be a whopping tome of facts and figures, but clearly outlining the ins and outs of your business is essential for every business owner.
A new survey by the Kaufman Foundation and LegalZoom found that 55 per cent of business owners mentioned unpredictable business conditions as the biggest business difficulty they face. Having a business plan can help you make it through these uncharted waters.
Further to a business plan, depending on your industry, you may also need a digital marketing plan.
2. Not understanding your audience
Who exactly is it that will be buying your product or service? What problem of theirs are you solving? Understanding specifically who your niche is and what makes them tick will help you in every step of your business journey.
3. Focusing on the frills
It’s easy to get caught up in the ‘fun stuff’. Designing a website, selecting business cards, company stationary, organising a launch party. Depending on your industry, when it comes to design and detail, sometimes simpler is better. Concentrate on the task at hand, ask yourself what exactly is it you’re trying to achieve and refocus your energy on that.
4. Not listening
While it’s your business, there are plenty of people worth taking the time to listen to. Your customers, business partners, mentors and accountant are all people you should sit up and pay attention to. As Richard Branson of the Virgin empire says, “To be a good leader you have to be a great listener.”
5. Blowing the budget
A review of ASIC insolvency figures by insolvency company FTI Consulting showed 5321 companies entered into administration in the first six months of 2013, a record for that period since 1999.
While there are almost certainly a variety of individual reasons behind these closures, the biggest culprit would be the discrepancy between money coming in and money going out. Seek professional guidance in setting a realistic budget and hold yourself accountable for keeping to it.
6. Doing it all yourself
Your budget may be tight – 45 per cent of business owners cited lack of access to credit as their reason for going out of business – but that doesn’t mean you have to do everything yourself. The job of running a business involves so many skill sets you can’t possibly do them all effectively. Ask yourself honestly what your trouble areas are and seek expert advice.