Start-Up Business Problems
Starting a business can be exhilarating and wildly fulfilling. However, it can be quite complicated, and may challenge you in ways you had not imagined. Knowing the challenges and problems you may encounter in your start-up can help you to prepare for the unexpected, and possibly help avoid common pitfalls.
The majority of small businesses that fail do so because of lack of cash. A 2004 U.S. Bank study said that 79 percent of small business failures cited “starting out with too little money” as one of the reasons for the business downfall. Often, this is because owners borrow based on their ideas of a successful business, instead of borrowing for a worst-case scenario. A start-up business owner needs to be optimistic, but often is too optimistic about seeing profits. Without adequate cash flow, slow sales or a downturn in the market can end the business before it has a chance to gain momentum.
A common problem for new business start-ups is to hurry into elaborate print advertisements and radio commercials without knowing the target market and researching other market data. The costs associated with marketing and advertising can be expensive. If a business does not know who its target market is, then it may be a waste of money to print these ads that may contain incorrect messaging or have them appear placed in publications that don’t reach the company’s target market. A business start-up requires a tremendous time commitment and a strong will. Add to this the financial stress of a fledgling business. Start-up business owners often have problems balancing the overwhelming demands of the company with the needs of a family. If the stress of the workplace spreads into the home, the business owner may feel pressure around the clock.
Trying to Do It Alone
A common problem for most entrepreneurs is the belief that they can handle all of the start-up’s operations by themselves. It may be a cost-effective way to run the business, but operating the entire business on your own may not be a wise decision or the best use of your time. Many small-business start-ups may not require full-time employees. But it’s a good idea to have at least two teammates, a lawyer and an accountant, ready to help. With experienced, reliable assistance, you can avoid other common business mistakes. When it is time to hire staff, be careful in your choices. Employees are a crucial component in the success of your business.
Poorly Priced Products, Services
Although you may be competing with the big box stores, you will most likely not be able to price like these stores. The nationwide and international companies obtain products at rock-bottom prices because of the sheer quantity of goods they orders and thanks to exclusive supplier contracts. Pricing your goods and services too low can delay the process of turning a profit. Instead of erring in this way, list fair retail prices, and make sure your start-up excels in customer service. You also should have a convenient location and hours.
by Kristie Lorette