5 Pitfalls to Avoid When Starting a Business - A Community of African Entrepreneurs Building Businesses & Transforming Africa.
18043
post-template-default,single,single-post,postid-18043,single-format-standard,qode-quick-links-1.0,ajax_fade,page_not_loaded,qode-page-loading-effect-enabled,,qode-theme-ver-11.0,qode-theme-bridge,wpb-js-composer js-comp-ver-5.1,vc_responsive

5 Pitfalls to Avoid When Starting a Business

5 Pitfalls to Avoid When Starting a Business

Business owners will continue to face challenges with each passing year, but if they can take a proactive approach to mitigate some of these potential pitfalls, they can safeguard themselves from the beginning and stand a higher probability of success over the long-term.

With all of this in mind, here are five pitfalls that every business owner must avoid when starting a new business.

1. Confusing a Product With a Business

From the get-go, many business owners confuse a product with a business. The risk of this type of thinking is that they don’t consider all the components that need to work in harmony to create a business — such as HR, culture, systems, legal, etc.

Incompetence — specifically in the planning stage — is one of the leading causes of business failure. This ineptitude isn’t innate; it can easily be overcome with necessary due diligence. Related is the failure to consider the market. CB Insights found that over 40 percent of businesses fail due to a lack of a market need. Business owners need to determine whether or not there is a market demand for that product in the first place through the necessary market research and seeking out expert opinions.

 

2. Failing to Differentiate Your Business

Related to the topic of market research, and determining whether there is a demand for your product, is the concept of brand positioning — that is, differentiating your business from the rest.

Failing to think about how you can differentiate your business from competitors can threaten its long-term sustainability. Keeping an eye on your competition is crucial at every stage of your business, but that is especially true in the beginning. When it comes to competing, don’t make the mistake of competing on prices.

3. Cost Cutting at the Expense of Bringing in New Business

A classic pitfall that many business owners fall into is trying to cut costs. What’s on the line, however, is much more consequential: new business itself. Many business owners attempt to save money by taking tasks on themselves, but in doing so cannot achieve high-value wins like bringing in new customers while their time is spent elsewhere. They get worn out as they underestimate how much time is required for their end goals. The focus should always be on bringing in new business over saving inconsequential dollars.

4. Not Testing Anything

Businesses need to rigorously test and measure everything. Failing to keep tabs on your metrics and data is a mistake at any point in a business. The right decisions as to where your budget should be allocated, for example, can’t be made if you don’t know how many new potential leads you have or how many sales you’ve made.

In short, testing every aspect of your business especially from the very beginning, from your sales to your marketing and everything in-between, is essential. Experimenting and learning from those outcomes can help you know if you’re on the right path and whether you should stay the course or try something new.

5. Scaling Too Quickly

From the outset, any business growth would seemingly only be a good thing — and quick growth, all the better. Of course, growing too slowly is also a problem, but growing too quickly tends to get overlooked.

Instead, businesses should focus on strategies that support sustainable business growth. Knowing this, would ensure that  all the right pieces are in place when the business is started by ensuring the multiple revenue streams  keeps it going, especially in the early years.

The Bottom Line

There are a lot of pitfalls that business owners have to manage closely when starting a business, from failing to consider the market, to cost-cutting at the expense of bringing in new business, to the risk of scaling too quickly. However, being aware of these pitfalls serves as a major safeguard against them, giving managers the advantage of knowing how to hedge their bets to yield higher chances of success.

 

 

Source: Young Entrepreneur Council

4 Comments
  • Juliet Chijioke-Churuba
    Posted at 08:39h, 11 December Reply

    ‘Failing to keep tabs on your metrics and data is a mistake at any point in a business.’ my biggest mistake,
    ‘SCALING TOO QUICKLY’ Another stupid mistake made by me

    I am learning the hard way. now i have to start all over again.

    • TheIncubators Team
      Posted at 15:16h, 18 December Reply

      Wow!!!

      So sorry about that.

      We are pleased to know you have identified some of your mistakes and willing to correct them. That is the spirit of entrepreneurship.

      We wish you success all the way.

  • Ikechukwu ani
    Posted at 19:42h, 04 January Reply

    point No.3 got me most. i used to think that saving cost at the expense of new try outs would yield more profit but after a while, i have seen that it is rather more a damage to growth.

    • TheIncubators Team
      Posted at 17:19h, 30 January Reply

      Great to hear that you learnt something in this piece. The most important thing is that you are learning everyday and making adjustments where needed. Thanks for dropping by Ikechukwu.

Post A Comment

We are one of Africa's fastest growing business ecosystems for young entrepreneurs.