In the 21st century companies have so many more opportunities, thanks to the World Wide Web and advances in transportation. However, that doesn’t necessarily mean you’ll make your millions much easier than a few decades ago. Aspects like competition have changed too—it’s more competitive now!—and you need the right material handling equipment, automation and other resources to get ahead.
So, how can you make your first few months and years more dynamic and not be forced to close your doors within a short period of getting started? These are the main pitfalls listed below and we’ve added some tips to help you overcome them.
Getting Capital
Many startups are looking for investors to help them get started. You may need cash for everything from renting an office to manufacturing and even pallet wrapping machines. Without equipment to ensure a proper workflow you won’t be able to impress more than the established brands in your industry. This makes it worth investing in quality gear from the start.
Do create a detailed budget so you know exactly what you’ll need to survive. Experts suggest you acquire funding for around six months’ expenses, so you can continue operations while you don’t make profit yet.
A detailed budget also helps impress investors, since it makes you seem meticulous in business dealings. However, even if you have a brilliant business idea it takes a lot to have someone believe in you. Unless you can impress the hosts of Shark Tank or Dragon’s Den, you may have to start off with a loan from family members—many entrepreneurs started that way!
Being Compliant
The current business environment—for almost any industry—has many guidelines and laws dictating how you can manage your activities. As examples, have you considered the following:
- Privacy laws to keep in mind when working with customers’ personal information
- Employee management
- Record keeping
- Financial records for tax purposes
- State or federal laws pertaining to your industry
- Health and safety
- Risk management
Since you don’t want to be caught on the wrong side of the law—such as facing a lawsuit from a disgruntled employee—it’s money well spent to get a business lawyer’s advice from the get-go.
Gaining a Competitive Edge
If you want to see profit, you need to prove to potential clients that you have something other suppliers or service providers don’t have. Consider whether you really have a USP that sets your startup apart, BEFORE you launch a business. If it’s too difficult to have people believe in your product, you won’t be able to acquire some of the market share that established businesses already have.
It’s worth noting that aspects like ‘better customer service’ or ‘using modern technology’ are also enough reason for some clients to pick you rather than other brands. However, you’ll need in-depth market research to determine if your offerings will be relevant and inviting to a big enough audience.
Understanding Your Target Market
This brings us to a major challenge for any business: getting to know your target market.
Selling something that looks interesting to you is NOT a smart business idea. You need a product or service that directly relates to a need many people have. If you can solve a problem or provide something they lack, there is enough reason for them to consider what you offer.
To know exactly what people’s needs are, requires research. This can be done through experts or doing it informally through tools like online questionnaires. The goal is to determine the details of your ideal client:
- Age group
- Interests
- Pain points (that you aim to solve)
- Geographical location
- Gender
- Income
You need this to understand what they can afford and what you need to mention in your marketing campaign in order to prove your startup is worth their attention AND money.
A follow on from this is that you need quality marketing campaigns to get noticed. Luckily there are many online tools to help you with digital marketing. However, you may need to start paying for professional marketers if you really want to get people talking about your brand.
Also, remember that focusing on market research and marketing takes a lot of time away from other aspects of the business you may need to focus on. This is why outsourcing should always be a consideration.
Financial Management
Another area for which to consider outsourcing is managing your money. If you don’t have healthy cashflow, you’ll close your doors earlier than you think!
Especially if it’s not your area of expertise, find a service provider to help with bookkeeping and especially tax management and payroll. These service providers often have business advisors that can help you stay on track, while you focus on your products and service delivery.
Scaling the Business
If you get products and marketing right, your business may grow. But be careful! Growing too quickly will put your team and resources under pressure. It’s worth taking it slow rather than expanding too fast and getting a reputation for letting customers down.
In Summary
The modern arena has so many success stories of people taking an idea and turning it into an established business. So, why can’t you? Find the balance between taking risks and still playing it safe in the areas mentioned above. Our practical tips will help you avoid unnecessary disasters.
Now, good luck!
