When you want to build a thriving business for yourself, it’s not enough to have the will and love for it. If you’re not careful, you might fall into certain financial problems that will sabotage your business, no matter how much you love it.
And below are some pitfalls that can sabotage new business.
Serving a Market that’s Too Small
It’s normally good to focus on a small market, especially when you’re serving a crowded industry. But sometimes, you can make the mistake of serving a market that’s too small to support what you do and as a result, you won’t sell as much, and your marketing efforts don’t reach enough people.
To adjust, you’ll need to move to a bigger market with less competition. Study your market carefully to find under-served niches.
Not Having Enough Capital
Like it or not, you’ll need money to start a business and sustain it through the tough first few months of growth. And sadly, too many great new businesses close shop way too soon, simply because they started out under-funded.
If you want to learn how to convince bankers, lenders, and other investors to put their money in your business, you’ll want to be able to explain how your business generates profit in 1-2 sentences. Learn more about writing a good personal business plan by reading this article.
The issue of not having enough capital is also related to the third pitfall:
Not Covering Operating Costs
It’s easy for first-time Entrepreneurs owners to make the mistake of thinking money will come quickly, and that sales will be brisk enough to cover operating costs. But actually, early on in the business, money might take longer than you expect to arrive.
Image credit: Start up toolkitTo avoid Pitfalls #2 and #3 in one swoop, estimate your ROI (return on investment) to take twice as long, the capital you need to be twice as much, and that the revenue will be half of what you expect
The resulting numbers may look daunting in the beginning, but as you rise up to meet those numbers, you’re more guaranteed to achieve success in the long run.