Starting a new business is something entrepreneurs think about on a regular basis. For this group of people more than any other, it seems, the buzz and challenge of executing a new idea and making it profitable is more exciting than any other. So much so in fact, that it’s often hard to keep entrepreneurs and enthusiastic business people from jumping from one project to another.
Of course this also mitigated by the fact that the probability of a new business failing is pretty high, as many impending stumbling blocks appear to stand in the way.
Preparing yourself beforehand however? That’s one of the best ways of avoiding the common pitfalls. So here are five you’d do best to sidestep:
Limited or Not Enough Funds.
Of course this is one of the most likely of stumbling blocks to show up in any risk management profile of a new business, but even despite that, so many new businesses fail because of a simple lack of funds to keep them going. Nonetheless, it’s important to avoid desperation and accepting any funding options without assessing the associated risks involved – bad debt can become a killer Achilles’ heel for cash-flow sensitive start-ups.
Couple that with the reluctance of banks to lend money to entrepreneurs with track records that are a little blurry or incomplete, and it becomes even more of a problem.
Small business owners, especially when starting out, have a lot of demands to juggle and responsibilities to maintain. Most of this can be so tiring that it takes away people’s time for barely anything else, especially relationships, which are important for emotional well-being and physical sustenance in that they help maintain a balanced, productive life.
Breakdowns in relationships, whether inside work teams, family or friendship circles, are another huge common factor in the failure of many new businesses.
A lot of successful business people talk about the idea of jumping in and executing before you’re ready. Although there’s a lot of truth in that, and especially in the old adage of ‘learning to fail’, new business starters should also take it with some level of scepticism.
Going in without a plan, or even with an extremely lacklustre one, isn’t likely to help guide you through the tough times or the initial first few stumbling blocks. A solid business plan is always a good foundation, even better if ran past someone with a great deal of experience.
Getting involved in a certain market or executing a certain plan because it’s been romanticised or built up in a business leaders head isn’t really a great way to go into a new business. Overly ambitious plans or a hugely idealist vision is something that can cause a great deal of problems to new businesses starting out.
Business owners should be cautious about going into markets they know nothing about or urging growth at an unsustainable rate, such problems have lead to the downfall of many previous, now unheard of, businesses.
There are many things to be aware of when first starting out in the world of business. The stumbling blocks mentioned above are just a few of the most common situations failing businesses find themselves in before it’s too late.