More and more Americans are starting their own businesses these days. In fact, the number of small businesses in the United states has grown by nearly 50 percent over the past quarter century, and there’s no sign that the trend is slowing down. Small businesses today account for over half of all U.S. sales and tens of thousands of jobs.
If you’re one of millions of Americans who’s thinking of starting a business, you’re probably learning a lot about how to be a success. But you need to be just as aware of what mistakes to avoid. Here’s our list of the five things you definitely don’t want to do when you’re first starting out.
No. 1 Assume You’ll Get Financing
It’s been nearly a decade since the start of the Great Recession. But America’s lenders are still far from eager to lend money to people who are starting a business without some assurance they’ll get their money back. That means you will probably need to come up with some collateral — typically your home or your investments — in order to get a small business loan from a bank. And you probably don’t want to do that unless you’re very certain your business will succeed.
If you can’t get a loan from a traditional lender, or don’t want to risk your a substantial portion of your assets just yet, look to other sources to finance your business. Personal savings, friends and family, corporate loans or even federal grants are possible sources of capital. Or try a crowdfunding site such as Indiegogo or Kickstarter. They’ve raised millions of dollars for a variety of projects since 2009.
No 2. Don’t Have a Vision
Starting a business to make money or fill up your free time is a very bad idea. Running a small business is incredibly grueling work, and any financial pay off — if it happens at all — is probably a couple of decades away.
On the other hand, having a clearly defined “Why” will get you through the hard times. It will also help you attract like-minded employees who share your vision and have the energy and motivation to help the business succeed.
No 3. Don’t Have a Clear Marketing Plan
One of the biggest mistakes people make when starting a business is assuming that customers will not only find them but will also want to buy what they sell. But it’s not enough to have a great product or service. Somehow you have to get the word out and woo new customers away from their preferred brand. And that’s nearly impossible unless you’ve identified who those customers are.
Start by asking yourself what problem or “pain point” your product solves. Then identify who in your potential market has this problem and concentrate your marketing efforts there. If you’ve developed a great new new skin care line that builds collagen and erases wrinkles, for example, you don’t want to waste money trying to sell it to tweens and teens.
No. 4: Don’t Have a Value Proposition
A value proposition is a clear, concise statement that communicates why a customer should buy from you. It is a promise to your potential customers about what problem you will solve for them and why you will do it better than anyone else. It is not a statement of your product’s features. Your customers don’t care that your skin cream took five years to develop and is made from 50% palm kernel oil. They want to know how it’s going to improve their skin; how soon they will see results; and why your cream is better than Brand X.
No. 5: Try to Do Everything Yourself
Even if you’re a sole proprietor, trying to do everything yourself virtually guarantees that you’ll do nothing well. If you’re just starting a business and not yet in a position to hire employees, at least outsource some of the routine tasks that take too much time. The internet now offers dozens of websites where you can post freelance jobs and hire qualified workers for a day, a week or longer term. Check out Upwork (formerly ODesk) for your everyday needs. Or if you’re looking for highly skilled workers for an important project, Toptal is an excellent bet.
Starting a business is challenging and scary. Knowing where you excel and where you need help is very important to your success. And that’s where the experts at The Carmoon Group come in. We can help you optimize your business strategy, manage your risk, find capital when you need it, and much, much more. Just give us a call or contact us online for your free consultation. We’ll get back to you right away.