Five Problems to Watch for When Starting a Business

With the economy currently in a state of decline and unemployment on the rise, the business world is filled with young entrepreneurs creating their own jobs by creating their own businesses. As the number of start-ups in each industry increases, however, the competition in those industries becomes even fiercer.

No one wants their new business to fail- every new business owner believes that it is their will to succeed and their drive to work that will keep the doors open. In reality, scores of new businesses across the country close their doors after only months of operation. No matter how strong your desire to succeed, success is only possible if you have all of the necessary tools to keep your business running.

This article will point out five problem areas typical of new businesses, and how to make sure that your business does not fall prey to these issues.

1: Lack of Business Knowledge or Management Skills

Ultimately, a business’ greatest strength or weakness is the owner’s ability to make canny decisions and appropriate judgement calls. Gut instincts are good, but nothing replaces a working knowledge of the different aspects of a business, and how each aspect should be managed and organized. If you don’t understand your business inside and out, you won’t be able to run your business for maximum efficiency, and that will endanger your profit margins.

2: Setting Overly-Ambitious Goals

People who are new to running their own business often over-estimate their initial profits, sales, and market penetration. It’s easy to say “Only 10% of my market would need to buy my product in order for me to become a millionaire!” because the percentage sounds so small- but only a thorough and accurate feasibility study can tell you what you can expect in terms of sales and market penetration in any given period of time. Market data is key, especially in the early days of a start-up, without previous numbers to use in projecting future earnings.

3: A Poor (or Non-Existent) Business Plan

Though it sounds hard to believe, many people start a new business without first creating a business plan! That’s like beginning construction of a house without a blueprint. The business plan provides a solid guide for many years to come, reminding you of your business’ goals, plans, and structure. A good business plan doesn’t just cover the nature and size of your endeavour- it includes goals for the future and the objectives for success.

4: Lack of Support

No matter how “small” your small business is, you can’t do it all on your own. A healthy business needs support of all kinds: financial reserves, equipment backup and repair, and people to help should business get overwhelming or you fall ill. Not all of these types of support are created equal: capital is the most important type of support your business can have. Capital can help you afford the other resources you don’t have, and also give you the ability to purchase prototyping, research, and equipment. That doesn’t mean you have to be rich already to be an entrepreneur: raising capital through investors can be difficult, but it’s never impossible for the go-getter with a great idea and an airtight business plan.

5: Lack of Ambition and Drive

Many people who dream of owning their own business dream of setting their own hours and enjoying the good life once success is theirs. That dream can be a reality, but only after an incredible amount of hard-work and determination. Owning a business is easy: running a successful business is hard. Look deep inside yourself and see if you really have the determination and the faith in yourself to keep going, no matter how hard it gets or how many obstacles stand in your way. Knowing yourself, your strengths and shortcomings, and what it is you truly want will take you a long way in business as well as in life.

Despite the difficulties in the economy, now is a great time to be a young entrepreneur. There is always room in the marketplace for another brilliant idea, sharp mind, and useful product. By avoiding these five problems, you can be sure you’re giving your business, your investors, and yourself every opportunity for success.

Business Nature and Its Scope

In our daily life, we often use the term business, commerce, industry, trade and the like often. Each term has a special meaning in “Business Organization”. In this content, you are going to be educated on the terms of Business, wherein you are going to understand the characteristics, branches and objectives of basic terms of business and the importance of Business in simple way.

The human carries out two activities from dawn until dusk; they are generally classified into two groups namely economic and non-economic activities. The activities carried out for making money is called economic activity whereas activities that are carried out on not making money but it is for other purpose, or not forcing on earning money is called non-economic activities.

The economic activities are further classified into three divisions namely Business, Profession and employment.

Business

The term business refers to the activities, which involves in connection with production or exchange of goods and services, with the ultimate objective to make profit from those activities, these are some examples of such activities such as banking, financing, manufacturing, trading, transportation, insurance and warehousing. Commodities production such as paper, pencil, pen, etc., or activities involving providing service such as banking, insurance, logistics, etc., are some forms of businesses. The person who does the business is called “businessman” or an”entrepreneur”. The firm carries out business activities is called an “enterprise” or “firm”.

Profession

Profession is rendering of a specialized services, as from the professional knowledge is called a “Profession”. Services such as doctors, company secretaries, lawyers, etc., are executed through the particular professionals.

Employment

Recruiting employees under an agreement or rules for any service or assignments / duty by the employer is called employment. For example, workers in a factory, office, etc., are executed through the deployed employees.

Business characteristics

Characteristics of business involve the following steps in the execution of business such as sales, dealing, recurrence, profit and risk bearing.

Business always involves the important event sales, or transfer of goods and services for value. the activities involved for personal consumption is not under sales or transfer. However, they don’t categorize under the term business. In fact, production or purchase of any goods and services, in order to exchanging on a value comes under business.

Mostly business depends on the dealing of goods and services, it consists of money transactions towards goods and services. Based on this any business is decided on its profit and lose count. This is another important step in business proceedings.

Recurrence of dealings is the important term to define business, in which its reputation, if a person sells a car and gets profit, it is not business. But, if that person regularly does it, then that activity is treated as a business.

Business activities always run under profit motive, in any business it involves production and purchase of goods and services in order to turn them into a profitable activity. Profit is life blood of any organization and this will be centralized for its survival, growth and expansion of the business.

Risk bearing is another face of business, when the business is not under control, then the business involves the element of risk and uncertainty. For example, loss by means of natural calamities, theft, fire accident, change of technologies, change in trend, or scarcity of raw materials, etc., are risks borne to any business. Certainly, a businessperson takes the business in the hope of profit.

Marketing Help for Small Business

Small business operators and owners are the economic life blood of Australia. Their commitment to operating a small business regardless of the economy touches every aspect of our lives. The creation of a business invariably requires passion and hard work.

Small business owners are often unbelievably busy. Consider this: that in addition to running the business, the most successful business owners realize the need to teach themselves a great variety of pertinent subjects in order to stay competitive and relevant to their chosen industry. Marketing will clearly be one subject at the top of that “must learn” list.

With such tight time constraints, its a wonder any small businesses find any time for critical task of developing and implementing a marketing plan.

So where do you start?

Marketing can be broken down into the following broad steps.

STEP 1.

The principle marketing decision a business needs to define is: Who are my potential clients and where can they be found? This step is critical because we need to target our promotions.

Asking questions such as: Do we provide our goods and services to businesses, the general public or both? Do our ideal clients come from a particular sex, age or other demographic group? Do our ideal clients come from a particular industry sector? Are our ideal clients geographically constrained (all live nearby) or can our customers come from around Australia or around the globe? Be as specific as possible. Is the decision maker the CEO of the company, the director of human resources, or a 37-year-old working mom? Does our marketing have to appeal to more than one member of a group or family. For Example: Food and toys are often marketed both to the children AND the financial directors (Mum & Dad). For larger businesses with multiple products, this process may be repeated for each product group.

In a nutshell ask yourself, WHO ARE OUR IDEAL CLIENTS or CUSTOMERS? This information will be used to determine where our marketing will be targeted.

STEP 2.

The next step will be to determine the message we want to get to our potential clients.

If you haven’t done so already, a business needs to create a powerful message that appeals to your ideal clients. Throughout the marketing process, this message will take on several forms.

It needs to answer the questions; What do we do? What do we do that is different from others, and MOST IMPORTANTLY what benefits do we bring to our clients.

This message can be thought of as a solution that you provide to your ideal client AS SEEN FROM THEIR VIEWPOINT! The message needs to be BENEFIT driven

In pure marketing terms, this message is called a USP – Unique Selling Proposition

It is primarily small businesses that laser target their audiences, larger businesses with larger budgets use broader terms.

STEP 3.

Test your message to see that it attracts the correct clients. Once you know it works, be very consistent with your message. Testing is easiest (an most economical) to achieve online with a website, but other methods work well too.

STEP 4.

Once you know what your message is, it has been tested to be effective, now you need to get it out into the world.

The base rule now is repetition. Resist the urge to change the message or be creative about it. Yes, I know. You get tired of saying it. You’re sure other people must be tired of hearing it.

If you’re not consistent, if you introduce changes here and there, you will likely not be getting the full power of it out to the market. Be assured even your most loyal clients aren’t going to get sick of hearing your message. Why? Because they really don’t ‘hear’ it as much as you think they do. People are busy with their own businesses and lives and they really aren’t paying as much attention to you as you think they are. So if you don’t repeat it very consistently, then you run the risk of people not remembering what you stand for, or maybe even becoming confused about it, in which case you may NOT be the first choice when a potential client finally decides to buy!

STEP 5

Some industries suit the use of an expanded verbal version of the USP, presented as an “elevator pitch”. That is simply a 10 or 20 second long presentation of what you can do for your clients, worded as an answer to the question “what do you do?” presented as “this is what we can do for you” It can be very helpful to think about and practice this pitch, especially if your business marketing plan includes personal networking.

The expanded version of the USP or “elevator pitch” can be transcribed into the multitude of advertising media available to your business. This can include Brochures, Newspaper ads, TV Ads, Posters and the various online promotion and advertising avenues.

STEP 6.

Next its time for brainstorming some ideas on HOW to get our message to your potential clients. Remember while determining the various marketing avenues, be sure to include methods to monitor the numbers of inquiries and sales which result from each method. This MONITORING is THE MOST IMPORTANT aspect to marketing. Without close monitoring, how will you ever know your “cost per acquisition” and ultimate profitability.

This is the step where you can be creative. Find new and different ways of getting your message out there, and do it as frequently as possible. Because the more often your ideal clients stumble across your message, the more likely it is when they’re ready to make a change, they’ll reach out to see how you can help them.

Here are some ideas on where to find your clients:

This step can be done personally for micro-businesses, or staff can carry out the processes.

Hand out business cards and share your pitch whenever appropriate to potential clients.

Get a small business website and promote it through Online Search Engines (Google, Yahoo, Bing and others) – these are fantastic, because potential clients are actually searching for something. You can target your advertising specifically to their search – simply give potential clients a clear path to the solution they are looking for!

Set your business profile or page up on Linked-In, Facebook, and Twitter. These can work well if your products are socially oriented- example: bands etc do well with Facebook.

In-person networking at local business meetings – this works well for Business to business relationships.

Personal selling is still effective despite many claims to the contrary. There are a multitude of very large, medium and small businesses worldwide who use sales reps as their sole promotional tool. This is one the most expensive forms of promotion, but for the right product, works very very well.

Broad based letterbox drops/ postcard type advertising can work well for businesses targeting the general public. If you can acquire demographically targeted mailing lists, that’s even better. Expect letterbox responses to be roughly around 0.2%.