Starting a small business can be exciting, challenging, and terrifying in equal amounts. After all, success is not assured – the Ministry of Business, Innovation & Employment data shows that only 37% of the single-person businesses started in 2010 were still operating in 2016. While there is no perfect recipe to make your new business work, avoiding these common errors will get you off to a good start.
Mistake 1: Not setting a business plan
As the old saying goes, “If you fail to plan, you plan to fail”. In that first flush of entrepreneurial enthusiasm, the last thing you might feel like doing is sitting down to hash out a detailed business plan.
But without one, you’re travelling uncharted territory without a map. You might still get where you want to go, but you’re far more likely to get lost along the way.
A good business plan will help you test the feasibility of your new venture, plan for potential problems, work out your goals and objectives, and discover opportunities and threats. MBIE has some great tips on how to write your business plan, as well as a downloadable template.
Mistake 2: Not knowing who your ideal customer is
You might think you know who will want to buy your product or service, but unless you do your research, your marketing could completely miss the target. Before you invest in any kind of campaign, you need to ask a few basic questions.
From your customer’s perspective, what does your product or service do for them? What benefits do they get from it, and what problems does it solve? Where are they, and how do they prefer to buy things?
Creating customer personas is a great way to identify your ideal customer. Check out our previous blog, where we talk a little bit about them.
Mistake 3: Undervaluing your product or service
It’s tempting to try to attract customers with low prices, but if you undervalue your product, your bottom line will suffer, and you could start to resent working for less than you’re worth.
Plus, it’s much harder to adjust your prices upwards if you start too low. If you start by giving things away, people will be reluctant to pay for them later.
Mistake 4: Trying to do everything yourself
When you first start out and cash flow is tight, DIY might seem like a good option. But even in the unlikely event that you have the right skills to do every task yourself, in reality, you just won’t have the time to do them all well. And if there are elements you struggle with, they’ll eat up hours of your time that would be better spent elsewhere.
For example, if you don’t have web development skills, it may be much more cost-effective to have Moreweb take care of your website while you direct your expertise to the areas that need it most.
Mistake 5: Ignoring the competition
As original as you think your business idea is, unless you’ve invented something brand new, there’s probably someone out there selling something similar. Find out what they’re offering and what they’re charging.
Sign up for their catalogue or mailing list. Work out your point of difference, so you know how your pricing compares and how to market your business against theirs.