Start-up organizations have flourished with the enhancement of technologies and social media. Entrepreneurs are more able to network, promote, and sell products to a wider base of clients than they were 25 years ago. With these advantages, many new entrepreneurs still make mistakes that cost them thousands of dollars at a minimum.
If you’re looking to start your own business, it’s important to know how to best launch your product, how the business world truly works, and avoid costly mistakes. Here are the top five mistakes start-ups often make.
Establishing Business Financing
When you’re looking for investors, it’s important to have a solid pitch and the type of investors you’re presenting to.
If you’re looking for business financing, you need to be aware that you have multiple options for investors, such as banks, family members and friends, as well as angel investors. While your business plan and pitch are important, it’s even more important to understand your audience. The way you present to a bank or angel investors is not the same way you would present to family members and friends.
Financing your business is more than just presenting an idea. You need to sell the product and concept of your business. Looking for business financing is a long process. Find the investor that supports you and expand to other investors.
No matter how much faith you have in your product, there are some people that will not invest in your business. Don’t let one investor rejecting your plan stop you from getting financed. The money is out there!
My Product is My Business
Your business has multiple aspects to it including marketing, sales, production, and accounting. The product or service you provide is not your business. It is a PART of your business.
Entrepreneurs often confuse their product for their business because most of the time people create their business around the product. If you do not understand why your business is doing well, it’s important to look at all aspects of the organization. Is the marketing strategy attracting consumers? Are there unnecessary purchases being made?
Each part of the organization is an integral contributor to the success of the business. All aspects need to be analyzed before overhauling the entire business and/or product. Before you speak with investors, keep this in mind. They will invest in your business because they believe in the product, not the other way around.
Money Solves Everything…Or Does it?
While money solves some problems, it will not solve all of the problems you encounter with a start-up business. At the end of the day, you need to do enough research and analysis to understand the root of the problem.
Often times, start-ups have a difficult time gaining traction with marketing and branding. Money will not solve your marketing and branding issues. Implementing a new marketing strategy will solve your problem.
Keep in mind, the market and branding issues are not the only issues you may experience. The location of your business may be an issue. Is a vegan restaurant in Texas going to be more successful than a vegan restaurant in San Francisco? The San Francisco location is probably going to be more successful due to having a larger target market in California rather than Texas.
But what about the old saying “You’ve gotta spend money to make money?” Spending money is necessary, however just like in real life, throwing money at your problems will not make them go away. Rather spending unnecessary money or spending money in the wrong areas leads you to maintain your current issue with loss in money.
Who is the Targeted Market?
Your product is the main reason why you’re in business. There is a specific market of people that need your product. Who are they?
Researching the target market and developing a strategy to attract this group of people are imperative. Start-up businesses commonly do not perform enough research to develop an effective marketing strategy. As a result, many entrepreneurs do not reach as many potential customers and sell as many products.
Understanding your target market is crucial to creating a profitable business. If you had a lemonade stand in a new-construction home development, would you set it up on the corner on a cold, December day or on a hot July afternoon? Where is your target market and when are they going to be most apt to purchase your product?
Where are the Sales?
Without understanding the target market, sales are hard to come by. Sales are a clear indication of the success of the marketing strategy. More sales show that the marketing strategy is reaching the targeted market and prospective customers are attracted to this new product.
For many start-up businesses, sales come with time. Would you purchase a new product from a new company without any reviews online? Probably not. Many people are reluctant to trust a new product without any reviews.
Marketing strategies heavily rely on branding and putting your company out there for people to see. Consumers want to buy a product or invest in a service that is proven to work. Providing the best customer service to those willing to invest in a product without reviews will also draw in more people to your business and increase sales.
Let’s Get Started-Up!
Start-up companies are growing on a daily basis. From web applications to local flower shops, people want to create their own business and provide an alternative or better product than what is currently available. Before starting your own business, it’s imperative to make sure you do enough research and work to start the best business plan which will work to attract your target market, investors, and ultimately lead to lucrative sales.
These five mistakes are commonly made and completely avoidable. Take your time developing your product and marketing strategy. Starting a business is not an easy task. Patience and research are necessary to create a successful business. It’s time to work hard and get your idea started-up!