Planning a business thoroughly lays the solid foundation for its future success. Unfortunately, when it comes to planning and preparation, a lot of aspiring entrepreneurs and business owners become hasty, sometimes even wholly disregarding the need for a detailed business plan. As a result, they run into significant problems early on that derail any sort of growth or progress. To help you avoid such common pitfalls, here are the four biggest mistakes that people make when planning a business:
Making Unreachable Financial Projections
While there is no crime in being optimistic about your quarterly earnings, you are setting yourself up to fail if you make unrealistic financial projections. In addition to the unneeded pressure to hit such a high target, it can also raise red flags from your lenders and investors who are expecting to see a more realistic view of your business' current financial state and its desired financial state.
Not Narrowing Down Your Target Audience
Just like how you cannot make every person on earth like you, you can't expect your business to service everyone. Instead of trying to cast a wide net and capture every man and woman out there, you should focus your marketing efforts on people who could really find your product or service valuable. No matter how sharp your $10,000 watch collection is, you won't sell it to someone who only has $100 timepiece budget.
Hiring a Full Staff
You don't need to fill every role in your business outright. Most new startups make the mistake of hiring people they don't need yet. They end up paying a full year's salary plus benefits to someone who they could've hired years from now. Another cheaper alternative is to outsource the work to a third-party. It can be cheaper to use a call center instead of customer service employees. For the first few months of your business, consider hiring only essential employees including marketing experts, IT engineers, and accountants.
Over-Hyping Your Brand
While a strong marketing presence is critical, especially for new contenders in an industry or space, over-hyping your brand, i.e., putting your brand name and logo on every bus in the city or buying every billboard in a 10-mile radius is merely overdoing it. Wow your investors and customers with a good product or service.
These mistakes are only four of the many others you'll encounter when building a business. Best way to avoid these mistakes is to identify them well in advance and prepare accordingly, and in the meantime, check out these businesses to examine what they’re doing in terms of establishing themselves in a competitive market.