In every corner of the world enterprising entrepreneurs are contemplating where to begin. Everyone wants to feel fully prepared and ready to open up shop and begin earning their living on their own terms. If you are considering changing your life and making a simple vision into an everyday reality you need to recognize the risks and not get lost in the rewards.
The statistics out in the world are complex and lack any real legitimacy. Yet equally true are some statistics out in the wild that paint a grim picture for any new business. Remaining focused, calm, and authoring a well thought out business strategy before spending money can truly improve your chance of remaining a solid fixture in the business world. In this article you will find a bevy of advice that pertains to every entrepreneur. Read the article and digest everything before setting off and looking into more specific research on your industry.
1 – Failure Is Common
Many entrepreneurs’ have dreams of one day owning and operating their own business. Creating your own business is an arduous and grueling endeavor with the possibility of big pay offs. Still many grim statistics are real and need to be thought of in advance and planned for. An estimated 60% of new businesses last a mere six years. I know full well that you do not want to be a part of that grim statistic. A little bit of studying goes a long way in preventing some of the more easily recognizable issues involved in operating your own business. Incompetence is truthfully the most common factor, and it’s not surprising given the numerous factors involved in operating a business.
2 – Every day a new Competitor
Technology has propelled the world of trade and business to ludicrous speeds. Nowhere is this more noticeable than the internet. Simply looking at the amount of web space being purchased is eye opening. A staggering 133,025,573 domain names are purchased daily. Many of these domain names are intended for up and coming business. These businesses could be direct competitors to your business. Competitors will be around no matter what area of business you pursue. These competitors will constantly be checking your pricing structure, specials, and promotions in an effort to outmatch and steal away valuable customers.
Do not allow your competitors to fall into the rear view mirror in your planning. You must stay vigilant and keep your eyes peeled for any changes in pricing or business tactics your competitor is employing. Failure to recognize these changes until after your customer base begins to drop can become a fatal mistake.
3 – Statistics can Lie
Market research is a standard among currently operating businesses, but the key here is not to be knocked off course by erroneous reports with no true scientific basis. It has gotten to the point where even reputable sources are guilty of making up fabricated marketing statistics. Thankfully once you know the right questions to ask and things to look for it becomes far easier to determine the validity of a certain statistic.
Keep in mind that you need to understand who conducted the primary research, who funded the research, and factor those together to spot any possible ulterior motives. As well as investigating to find out who was sampled in the research, how many were sampled, was it diverse and inclusive? Without applying these thoughts to your basic approach to statistic you can and will become easily lost in a sea of different numbers. Remember that it doesn’t even have to be an expensive endeavor carried out by some third party consulting firm either.
Simple informal surveys carried out both online and in store will give you a better idea of who exactly is coming to your businesses front door. Still third party consulting firms have the benefit of giving you extensive data split into demographics detailing many important details your customers would rarely tell you.
4 – Simple Truths
If that all sounded a bit daunting to you then think of it another way, break your customer base up into three groups. You have your frugal customer base, your convenience focused customer base, and those that do no budgeting what so ever. While many other factors contribute to decision making, it is safe to say that these are the three core consumer groups. Remembering that information gives you a base to work on when you are dealing with a situation that isn’t common to you. Focus on trying to sell to the frugal base the most and you will inevitably entice the other two customer bases as a result.
5 – Pricing can be your Downfall
In every realm of the business world a crucial distinction must be made when pricing your goods or services. Are you pricing your product fairly or are you being greedy? Everyone needs to make a profit to survive that is a simple reality. Yet if you price your wares too aggressively you can easily fail.
A products pricing must be balanced between your costs to produce the good or service, what your demographic can actually afford, what your competitors are charging, and understanding your value. Always remember that the cost of a product isn’t as simple as the literal cost of the item. Keep in mind that overhead costs will always be involved and can dramatically alter your business profit. Things such as shipping, rent, stocking fees, fines, litigation, and many more must be factored into your pricing structure.
Underpricing your product is a common tactic for under experienced business owners. Simply put underpricing your goods is a detrimental thing even if you are in a recession based economy.
Over pricing your goods can also alienate customers and create the feeling that consumers are not truly getting their money’s worth no matter how enticing your product. Thusly it is essential that you review your operating costs and supply costs, an important part of any business. Without proper accounting you will be in the ground before you even start.
6 – Networking kills the Head Hunter
While not completely erased from society head hunters are far less common today than they used to be. Anyone can simply go online and view a host of resources that serve as the middle man between employers and employees. As a result companies have no excuse for being unable to find a skilled worked to fill a position. LinkedIn alone is host to a stunning 225 Million users. Even low skilled jobs that only pay hourly have websites dedicated to giving employers a pool of talent from which it can choose from.
7 – Know your risks!
Every industry has its own individual set of data regarding business performance and problems. Know what you are getting into no matter which industry you are pursuing. Certain industries have a healthier rate of business operation. One study compared many industries against each other. The basis for the comparison was on how many businesses were still operating after four years in each respective industry. Finance Insurance and Real Estate 58%, Education and Health 56%, Agriculture 56%, Services 55%, Wholesale 54%, and Mining 51% all had percentages over fifty showing healthier industries. While on the other hand industries such as Manufacturing 49%, Construction47%, Retail 47%, Transportation/Communication and Utilities 45%, and Information 37% are much harder fields to compete in. Be sure to set goals that are going to be realistic given the industry you are attempting to break into.
8 – Know when to ignore advice
New companies face tons of challenges from day one, and management mistakes are a heavy part of those challenges. Asking for advice is a normal part of life but asking the wrong people can really hurt your company. It’s important to draw boundaries between people you care about and the company you run. Your loved ones do want the best for you but asking your family for advice is a risky move. The only exceptions in which those that you associate with closely in life should be allowed to advise you are when they themselves have operated a business that was any type of successful.
9 – Keep an eye on your competitors
Competitors will be around no matter what area of business you pursue. These competitors will constantly be checking your pricing structure, specials, and promotions in an effort to outmatch and steal away valuable customers. Do not allow your competitors to fall into the rear view mirror in your planning. You must stay vigilant and keep your eyes peeled for any changes in pricing or business tactics your competitor is employing. Failure to recognize these changes until after your customer base begins to drop can become a fatal mistake. When creating a business plan try to prepare for these variables with a pricing structure that extends out into the future and gives you more flexibility while still maintaining a profit.
10 – Goals and Revenue
One cannot remain stationary in business forever and a sure fire way of standing still in business is being unable to expand. Yet more often than not failure to expand is due to limited cash and not limited motivation. Goals must be set for revenue that can allow your business room to grow.
About the Author: Eduardo Dieguez is a professional content writer for i-Adapters, your headquarters for ipad mini accessories. Eduardo is an avid computer enthusiast and spends countless hours tinkering with electronics both new and old.