The odds are stacked against you.
Sorry, that’s not the best form of encouragement but frankly, chances are that if you’re in the early stages of starting your business or even in the first few years of building your startup, you have a 50-60% chance of failure within the next 5 years.
Simple – and avoidable – business mistakes are the root cause.
The good news is that I know that you’ll not be one of them because you’re one of the good guys. You’re determined to make it work. And you’ve landed on this page, which will give you several golden nuggets of guidance that will mean you’ve got a much stronger chance of survival than all your rivals.
Avoid these 5 common mistakes and you'll be raking it in having past the 5-year hurdle.
What’s a bad business model? Well, if I were to ask you “What’s your business model and your answer is something like:
“Eh, business model? What’s that?”
“Ugh. That business model thing. I don’t need one of those ‘cos I know what I’m doing.”
“It’s simple. I make something and sell it to everyone.”
Then that, my friend, is a bad business model. So then, what’s a good business model?
Well, I could write an entire blog post on this but for now, getting super clear and tight on the answers to the following questions will give you a good, simple business plan.
a) What is your product or service – in detail?
b) Who is your customer? Niche down. ‘Everyone’ is not acceptable. Hone it down to who they are, where they come from, what they do, what’s their income, how they live and so on.
c) What’s your competitive advantage? What can you do differently to anyone else in your field?
d) What’s the problem you’re solving for your prospective client?
e) Where are your customer’s coming from? Where can you find them?
f) Have you got additional products that you can sell to your customer and if so, what are they?
g) What products or services are you intending to generate in the future and when?
h) How much income do you project to make on a monthly basis? Be realistic. Take this number and halve it (just in case).
i) What are your monthly expenses? Be realistic.
j) Are you going to make any money? If the answer is yes, then great! If it is no, you need to reconfigure your plan.
Clearly, this is just a basic plan and any entrepreneur worth his salt will tell you that there’s much more to consider.
But if you’re not even doing this, then you need to get real. You need to start again and set up a proper business model that at least answers these questions in full, with your plan enabling you to get more money coming in that going out.
And then you’re good.
Setting a proper budget for your business, both from the start and throughout the course of your business is crucial for ongoing success.
It doesn’t matter if you are just intending to build a website, hire a copywriter or even if you’re thinking about taking your team out for lunch. You should be aware of how your business can budget for such expenses.
Sure, if you’re already a big company with a hefty cashflow, such issues may not need such close attention on a day to day basis and expenditures such as taking a client out for a slap-up meal may be more justified.
But in the majority of cases, why is it that entrepreneurs or small business owners who are in the early stages of setting up and building their empire, ignore such expenses, often overspend and put undue financial pressure on their company?
Vanity alone is not going to get you the contract. It’s not going to be the deal maker for your professional image. This is not a strategy, it’s a trap.
Setting a budget and sticking to it provides you with something you can measure against. It will enhance your awareness of business cashflow and force you to rein in undue discretionary expenditure that can often get out of control. Focus more on your fixed cost base – such as office space, utilities, payroll etc – the expenses that you need to enable your business to run.
Have you ever watched The Apprentice?
You know, the program where a bunch of people compete to win a big salary working for Lord Sugar (in the UK) or Donald Trump (in the US before he got other ideas).
I’ve seen pretty much every series and I’ve noticed the same thing happening in the final episode EVERY SINGLE YEAR.
The final two competitors have to pitch their own product or idea to a room full of who’s-who in their industry. But before then, they have to ‘launch’ their product, get customer feedback and prepare for the presentation. Their team always comprises of a selection of prior contestants from that series.
But when the team leader asks for feedback from their team as to what the public REALLY thought about their product, the answers are ALWAYS the same:
“They loved it!”
“They thought it was the best thing ever!”
“They had no complaints!”
But there are always customers who didn’t love it and did have concerns.
It never fails to surprise me what a huge mistake this is. The team feel that it is best not to put their team leader under pressure in the run up to their pitch, but when the questions from the audience pose the same concerns as the people in the street, the presenter is often lost for words and unprepared.
Don’t surround yourself with a team of ‘yes’ men and women.
Face constructive criticism head on and listen to contrary reasoning. Without it, you can’t adapt to the customer need and you’re at a disadvantage when attempting to compete with your competitors and grow your business.
Sure, I get it.
It’s your company. It’s your baby. You’ve worked damn hard to get your business to where it is today.
You’ve put in the hundreds of hours, the late nights, the sweat and tears and frankly, you’re extremely proud of your product and the service you’ve generated.
And that IS great. Congratulations.
But now you need to stop thinking about yourself. Your product or service is only viable if people need it, want it and keep on desiring it.
Those pesky customers with their annoying suggestions, crazy support questions and pathetic complaints. Pah! Why can’t they just leave you well alone so you can continue adding features and fancy schmancy bits to your product that no one wants. After all, they don’t know what they’re talking about, do they?
Except they do because they’re the ones buying your product. They’re the ones that pay your salary. They’re the ones that keep your employees employed.
It’s not about you anymore. It is all about them. Be more considerate, appreciative and attentive to your customer.
Your existing customers are diamonds.
Don’t neglect them because, without those original customers you had when you first started out, you wouldn’t have a business now.
Just think about how your reacted when you got your first client. Remember how much you appreciated them and that you bent over backwards to service them with everything they desired.
So, why are you not doing that now?
If you don’t look after your existing customer base, most of them will have no qualms about looking elsewhere should they need your services again and believe me, they’ll find another option if they need to.
Don’t forget about them. Why don’t you get in contact with them now? Just check in to see if they’re doing well or if there’s anything you can help them with. Tell them that you appreciate their business. Offer them, and only them, some value that others can’t get elsewhere.
Do this and they won’t forget about you when they need you again.
Take note of these 5 mistakes because in order to make a success of your business, you can’t afford to ignore them. Sure, we all do things that we probably shouldn’t when starting our businesses or building our startup, but you’ll have a much greater chance of survival if you take account of the above.
I'm Dan. After over 20 years working directly in investment, wealth management and banking, including starting my own regulated business and then transitioning to a copywriter, I've decided to share my knowledge, experience and business views with you.
My mission? To empower you make better decisions in your business and personal life. You'll find me talking about business, finance and fintechs, copy and marketing techniques and how this connects to well-being and mindfulness.