Overview
Launching a small business can be risky and success is not always guaranteed. Businesses are most vulnerable to failure during the early years of trading, with 20 per cent of new businesses folding within their first year and 50 per cent within their first three years.
These figures should not scare you off, but should prepare you for some of the challenges entrepreneurs face when starting a business. With hard work and an awareness of the issues, a new business can be a great success.
This guide looks at the most common mistakes new business owners make and, more importantly, how you can avoid them. It also shows you how to improve the chances of your business idea succeeding.Poor or inadequate market research
Research and planning are vital to ensure that your business idea is viable and that your pricing is both competitive in your market place and provides an adequate return.
A common misconception is that entrepreneurs who have failed simply lacked sufficient funding or did not put the right team in place. However, many fail because they have not spent enough time researching their business idea and its viability in the market.
Lack of in-depth market research
Lack of proper market research is one of the key problems for new businesses. It's easy to get carried away with a business idea and set up a business without testing its viability.
It is also important to consider what your audience or customer needs are and to use market research to test them, and to then factor feedback into any products or services you are designing.
Keeping your business ideas to yourself
Failing to share your business ideas with people you trust means that you will miss out on objective feedback.
Brainstorm with colleagues to give you valuable perspective. Note down any good ideas you get from brainstorming and use them when developing your business.
For more information, see our guide on how toresearch and develop your business ideas
.
Asking potential customers what they think of your plans or allowing them to examine a prototype can be invaluable. It can help you discover whether your product offers a solution to customers' problems or something new and unique that they would purchase. Positive feedback will give you the confidence to proceed and could help you attract investment funding. On the other hand, negative feedback will alert you to the need to rethink your plans and could help you avoid wasting time and money on a product that will not sell.
If you want to keep your ideas confidential, consider using a non-disclosure agreement, also known as a confidentiality agreement. This is a legal contract between you and another party not to disclose information you have shared for a specific purpose.
Not knowing your clients or marketplace
If you do not complete adequate research, you are in danger of selling to the wrong people or of not understanding your marketplace. To avoid this:
use information, such as free government data or your own network of contacts
carry out field research to explore customers' profiles and discover buying trends
swap ideas with people in the same sector
Launching a small business can be risky and success is not always guaranteed. Businesses are most vulnerable to failure during the early years of trading, with 20 per cent of new businesses folding within their first year and 50 per cent within their first three years.
These figures should not scare you off, but should prepare you for some of the challenges entrepreneurs face when starting a business. With hard work and an awareness of the issues, a new business can be a great success.
This guide looks at the most common mistakes new business owners make and, more importantly, how you can avoid them. It also shows you how to improve the chances of your business idea succeeding.Poor or inadequate market research
Research and planning are vital to ensure that your business idea is viable and that your pricing is both competitive in your market place and provides an adequate return.
A common misconception is that entrepreneurs who have failed simply lacked sufficient funding or did not put the right team in place. However, many fail because they have not spent enough time researching their business idea and its viability in the market.
Lack of in-depth market research
Lack of proper market research is one of the key problems for new businesses. It's easy to get carried away with a business idea and set up a business without testing its viability.
It is also important to consider what your audience or customer needs are and to use market research to test them, and to then factor feedback into any products or services you are designing.
Keeping your business ideas to yourself
Failing to share your business ideas with people you trust means that you will miss out on objective feedback.
Brainstorm with colleagues to give you valuable perspective. Note down any good ideas you get from brainstorming and use them when developing your business.
For more information, see our guide on how toresearch and develop your business ideas
.Asking potential customers what they think of your plans or allowing them to examine a prototype can be invaluable. It can help you discover whether your product offers a solution to customers' problems or something new and unique that they would purchase. Positive feedback will give you the confidence to proceed and could help you attract investment funding. On the other hand, negative feedback will alert you to the need to rethink your plans and could help you avoid wasting time and money on a product that will not sell.
If you want to keep your ideas confidential, consider using a non-disclosure agreement, also known as a confidentiality agreement. This is a legal contract between you and another party not to disclose information you have shared for a specific purpose.
Not knowing your clients or marketplace
If you do not complete adequate research, you are in danger of selling to the wrong people or of not understanding your marketplace. To avoid this:
use information, such as free government data or your own network of contacts
carry out field research to explore customers' profiles and discover buying trends
swap ideas with people in the same sector
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