Starting up a business is a daunting task and so is running the business. It is a constant challenge and struggles where only a few can thrive. That being said, most businesses can survive the first few years or more if the product/service meets the market needs. The real challenge is in ensuring that the business prospers, even through critical times.
Every business owner needs to be aware of the common pitfalls to avoid business failure. Make sure to read carefully and check whether you are doing them!
Let’s start with the elephant in the room. To put it simply, a business is like a ship. Whether that ship sinks or not is depending greatly on the captain. Of course, it is not a one-person job but the safety of the ship ultimately rests on the captain’s shoulder. Managing resources effectively to carry out daily operations is an essential skill of top and middle level management. When we say resources, inanimate resources such as inventory and machinery are much easier to manage. Managing your employees, on the other hand, requires a delicate balance of firm leadership and empowerment. The best way to ensure that the business runs smoothly is to show your employees that they matter and that they make a difference.
It is, as the saying goes; “If you fail to plan, you plan to fail”. Planning for the unknown is easier said than done. However, a good way to start would be to analyze your historic data as a basis and try to predict the trends. The commonly accepted margin for error when the forecasting demands is 20% so there is plenty of room for deviations. Planning lets you know where you stand and how you can take advantage of demand trends. Without an effective analysis and a plan, you will be shooting in the dark. And, you will miss it!
Market Strategies In this age of hyper-competition, you need to have a solid customer base that wants your products and only your products. Hence, it is critical that you create a unique product that your competitors cannot imitate you. This can be achieved through patents (such as Pfizer vaccines), secret formulas (such as Coca Cola), and customized products (such as Lenovo’s Build-Your-Own-Gaming-PC campaign). If you don’t have a niche customer base, you will be losing customers left and right, especially when a competitor can offer the same products for a lower price. Knowing your target market and tailoring your products to meet their demands is the golden rule to survive the intense competition.!
As the business grows, the development of communication skills becomes essential. When we think of communications, the first thing that will come to most people is internal communications. While it is important to communicate your mission, vision and goals to the employees, it is also important to keep constant communication with customers and your suppliers. By maintaining communication channels with external stakeholders, you obtain valuable industry information, solid relationships and business development opportunities. Without the communication network or developing new knowledge, your business might have a hard time growing.
Adapting to ever-changing consumer preferences is a constant battle for all businesses. It is almost like a sink-or-swim pit of sand. No matter how big a business is, it will fail if it is not flexible enough to move with changing consumer trends. Nokia is a great example of how you can do everything else right and still lose out. In fact, inflexibility is an issue that the most Japanese companies are struggling with this. Due to their focus on systematicity and predictability, they cannot adapt fast enough to meet dynamic demand shifts. It is time to start adapting if you have not already done so!
Any business owner needs to be aware of their financials and running capital at any given time. They should also understand and control their costs – acknowledging risks and opportunities. Employing an experienced accountant, or investing in a good cloud-based accounting solution, can help ease the burden of financial management, allowing you to focus on day-to-day business operations. Miscalculating your position in terms of finances will put you in a very risky situation or even bankruptcy.
Have you ever been in a situation where each of your team members have their own agenda? If you have, you need to take charge and control the situation while you still can. In-fighting is never a good sign in any organization. Each department is going their individual targets will throw your business off-balance and off the market. Even in small businesses, partners can have strong opinions and desires that result in conflicts of interest. The best remedy in this situation is to negotiate and compromise while reminding the common goal to everyone involved- the growth of the business as an organized entity.
These are the pitfalls you should be avoiding while facing the challenges of the modern world. While these are common knowledge to most people, even the most seasoned professionals can be caught off-guard by the daunting task of creating/running a successful business.