Mistakes are inevitable when you start a business, particularly if you’ve never done it before. If you’ve made mistakes starting your business, you should know that you’re not alone. Everyone makes mistakes in business, but many overcome those mistakes and be very successful. Here we will cover some common mistakes that new entrepreneurs make and how to overcome them.
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Not Being Prepared for Startup Costs
It costs money to start a business. You may see many gimmick titles for articles telling you how to start a business with no money. Still, in reality, it always costs something, even if it’s just paying for business licenses and permits. If you did not correctly project your startup costs and find yourself unable to get your business off the ground, it’s not too late to look for financing options.
There are several ways to finance a business:
- Bank loans: This is the most common method but getting approved requires a great business plan and strong credit history.
- SBA-guaranteed loans: The Small Business Administration can act as a guarantor, helping get that bank approval via an SBA-guaranteed loan.
- Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
- Venture capital: Venture capital investors take an ownership stake in exchange for funds, so keep in mind that you’d be sacrificing some control over your business. This is generally only available for businesses with high growth potential.
- Angel investors: Reach out to your entire network, searching for people interested in investing in early-stage startups in exchange for a stake. Established angel investors are always looking for good opportunities.
- Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice because SEC regulations apply.
- Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
- Personal: Self-fund your business via your savings or the sale of property or other assets.
Not Knowing the Market
You may be finding that the market is just not adopting your product or service. If you didn’t do market research first, it might be that you aren’t meeting a market need with your product or service. You can pivot your business and modify what you’re offering to meet a need, but before doing that, you need to do the market research you missed.
There are two types of research – primary and secondary.
Primary research involves going directly to the source, your potential customers. You have to go out and ask people what they think of your product or service and if they would have an interest. If not, what would have to change to make them interested? You’re trying to determine a few things. One, is there a market for your business? Your product or service has to solve a problem that people have and are willing to pay to solve.
Second, you’re trying to find out who has an interest in your product or service. Is it a younger demographic or an older demographic? Is it primarily men or women? Is it people at a certain income level? You also need to know why they will buy your product or service. What would motivate them to buy?
This information will help you determine where you should market your product or service. For example, if your market is a younger demographic, you should probably focus your marketing on sites like TikTok and Instagram. You might also want to invest in influencer marketing, which means paying people with large social media followings to promote your product or service. You can find micro-influencers with smaller followings and lower rates.
The information will also tell you how to market the message you send. This comes from knowing what will motivate them to buy. Knowing your potential customers can personalize your message to show how your product or service meets their needs and wants.
You can start by asking family and friends to get all this information. You can also gather people to hold a focus group. You can get people to attend by offering a free sample of your product or some other small incentive like a gift card. You can also create online surveys to get information from a large, random group of people.
The questions you should ask, aside from demographics, are things like:
- What do they currently buy related to or similar to your product or service?
- What motivates them to buy what they currently buy? What do they like about it?
- What could you do differently to get them to buy from you?
This is when Google is your best friend. You’re going to start looking up information about your industry and competitors. Start by searching “_____ industry statistics.” You’ll find out the size of the market if it’s growing or declining, and sometimes statistics about who the customers are in terms of demographics and location. Sometimes you’ll also find out what companies are the biggest players in the industry.
Then search for trends in your industry. You’ll find out what types of products are trending and their features, and you’ll often find articles about who those products are trending with. For example, products might be rising in popularity among millennials or Gen Zers. All of this research will give you information about your market and what your product design should look like based on what’s trending.
Next, you’ll want to research your competition. You can determine their strengths and weaknesses by looking at customer reviews. You can also find out which products sell best and who their customers are. You’re looking for a way to give your company an advantage based on what they’re doing and not doing and what you’ve learned about your market and their buying motivation.
Over Projecting Income
Most entrepreneurs make this mistake. They get excited and hopeful, and they project unrealistic sales. If you’re in a position where you’re not making as much money as you thought you would, you should first understand that it takes time. If people like what you’re offering, you should start to get repeat business and referrals over time. But the first thing you should do is talk to your customers and find out how they liked your product or service and why. The “why” is the most important part.
Having the right messaging should increase your sales. Knowing why people like your product should directly relate to the message you’re sending in your marketing. You want to tailor your messaging to reflect the value that people will be getting based on what they want and how it meets their needs.
You’ll also want to know how your customers found you. If you find that most people who bought your product found you on Instagram, ramp up your Instagram marketing.
Understanding your customers is the key to finding new customers.
So, you need to learn from your mistakes. Everyone who starts a business falters at first, but you just need to accept your mistakes and keep moving forward. If you keep trying, you’ll eventually find the success you’re seeking! You’ll learn something new every day, so be a sponge, soak it up, change what you need to change, and keep growing your business.