Most of us are unaware that 80% of businesses fail in less than 20 months. It is a scary fact that keeps aspiring entrepreneurs away from starting a new venture of their own. In reality, we should not get discouraged, but take the opportunity to learn from the mistakes made by others and also by us.

There are certain time-tested strategies to begin a business and, if you adopt these early on, you will most likely survive and grow in the long run—even if you have to face unexpected hurdles midway. While starting your business, you should take the opportunity to build a strong foundation for it to prosper and grow. Utilize this prospect wisely and avoid making the common mistakes people make…

Unclear Business Idea

A business cannot start without a clear and definite idea. Moreover, for that idea to work properly and succeed, it must be defined and given a strong form before you take action on it. You have to clearly explain in a few words what your business actually does. If your idea is weak and flimsy, whatever you launch will be unsteady. The steps you plan to take your business forward will lack clarity. Besides, you will not be able to brand it properly. You will constantly need to go back and alter things. Make sure your idea is fully evolved before you put it to work and everything will be much smoother afterwards.

No Proper Business Plan

Many entrepreneurs do not think it important to prepare a business plan. A business plan does not have to be long-winded or detailed. But you should take time to chart out a roadmap to keep your efforts consistent, which will help you measure your progress. Planning out all the aspects of your business thoroughly, such as operations and structure, is equally important. Otherwise, you may run into big problems later. Poor planning, or a lack of it, will affect everything—from company culture and confidence to supply chains. You must plan your organizational structure, vision and mission statement, standard operating procedure and everything else. Your business plan is your road to success. Making a complete checklist for starting your business and pursuing it is the best way to get started.

Inadequate Research

Research for a business includes such areas as validating your idea, finding and understanding your target customers, studying competitors, learning about taxes and laws and more. All these are essential for you to make informed decisions. You should have in-depth understanding of your industry for instance, the types of materials you will use and how you should calculate their costs. Otherwise, you will not be able to price your products correctly and will end up losing profits. So, research is vital. This research can be time-consuming, tiresome and expensive, too. But, without it, your business will be unstable and risky.

Bad Financial Planning

Financial planning makes the difference between staying in business and closing down shop wondering what went wrong. Your business’s budget should include all your possible expenses into account, such as taxes, fees, costs of materials and labor, among others. You should be ready for every expense, because the burden of unexpected costs can be a difficult situation to recover from. Research is also important here, otherwise, you cannot make proper financial planning. You may not see the future, but you can try to predict typical business expenses and plan ahead for it. Base your budget on research and informed projections and make it a point to know how every penny is being spent. Evaluate how long it will take for you (and your investors) to seeing a return on investment.

Ignoring Competitors

Many new business owners think that since they are just starting out, they do not have to analyze what their competitors are doing. This mistake may leave your business lagging behind. No matter what stage of your business you are in, it is important to always make sure that you address anything that your competitors are doing. If they bring in new products to counter what you have in the market, you should be able to react immediately. It also means you must ensure you are monitoring your competitors all the time.

Final Words

These are the five significant mistakes one should avoid while launching a new business, because they will set the stage for failure from the very beginning and, if you do not know about them, they are easy to make. Knowledge is your most valuable asset and can help you avoid moving in the wrong direction or miss a vital step in the process.