Planning a business takes a great deal of care and attention to detail. It is easy to skip a few steps or ignore something major if you rush to get your business going. Any one of these omissions could turn your business into a failure before it has even started. Here are 7 major things ignored when planning a business that can result in failure.
1. Failing to Do a Business Plan
Unless you write a business plan you will be unable to assess the viability of your new business, let alone whether or not it would be profitable. There are several components of a good business plan, most of which are mentioned below. The business plan is fundamentally a business blueprint: your justification for starting the business, how it is to be developed and its ultimate objectives.
If you are constructing a piece of furniture you need a plan to follow. You need a list of materials and the way in which they are put together. You will likely cost it to establish whether or not it is cheaper to buy it or to make it yourself. It’s the same when planning a business. You need to define a course of events from concept to completion. You need to cost it and establish whether or not you need finance. If so, you will have to present your business plan to prospective lenders such as your bank.
2. Ignoring Your Financial Planning
Financial planning is a critical aspect of a business plan. You must cost your business out from:
- Raw materials and any employee costs
- Profitable selling prices or fees for goods or services
- Projected income over specified time periods
There are several other factors that account for your financial planning. Check over your initial business plan and cost each step.
Many people starting a new business fail to take financial planning seriously until they have to. Every new business needs a cash flow projection, particularly if you are looking for finance. You will have to assess your income and expenditure and be able to present a projected balance sheet. You must prove that your business is worth investing in, and that you will be able to repay any business loan offered.
3. Ignoring Market Research
Before you do anything else, you must make sure there is a market for your product or service. Many businesses fail because people have ignored market research and find they have no customers or clients. You can avoid this. Carry out some market research – this can often be done online. Market research is a critical aspect of planning a business, no matter what your business is offering.
Check out forums and social media. Ask ‘what if you had . . . ‘ and look for responses. Check out Amazon for products similar to yours, then look at their reviews and questions asked by users. This may give you ideas on how to adapt your products to provide solutions to the issues people are having with existing products.
You could use a Facebook Business Page to present an online questionnaire. Design the questions to find out potential response to your new product. Never ask for personal details – just questions that can help you analyze the potential market for your product or service. You are fundamentally making sure that your business has a market; that you have people interested in your type of product.
4. Ignoring the Competition
Ignoring the competition when planning a business is a potentially fatal error. If your competitors are selling the same products or services as you, how do you intent to compete with them?. If your business plan and financial analysis says you must sell at $20 and your competition is selling the same at $16, who are they going to buy from? You cannot ignore the competition.
Another aspect of competition is the market saturation of your area. Before even considering starting up a business locally, you must check out who else is offering your product or service in your projected geographical area. Find out who they are, what they charge and whether or not there is any possibility of you competing with them at their price.
Also, keep in mind customers tend to be faithful. If your competition is offering a good and reliable service, then why should they switch to you – unless you are undercutting them with the same or better service? You have to offer a really good reason for them to switch to you.
That could be a price advantage, a better product or a more comprehensive service – or even all of these. You could offer better guarantees or warranties, more design or higher specification or some other reason to persuade them to change. Think of yourself – what would be needed for you to switch from one of your own suppliers.
5. Ignoring Online Marketing
Ignoring online marketing when planning a business is a cardinal sin in this electronic age. Many people – in fact likely most – will look online for what they are seeking. Whether a service or a product, they will check Google Local for local businesses who can provide them with a service. They will also check online for products.
Many will go straight to Amazon for products! You must get registered with Amazon and get your own Facebook business page. Advertise on Facebook and sell on Amazon. Increasing numbers of people go online to find what they want.
They can check on the reviews for their product and make a purchasing decision based on these reviews.
You don’t need to have a website, although that would help. What will help you is to:
- Get a Facebook page for your business
- Get your products offered for sale on Amazon
- Register with other social media such as LinkedIn, Pinterest and Twitter: Tweet new products or updates to your Twitter followers
- Run a blog – there are free blogging applications available for you to use. You can keep in touch with customers and clients by blogging fresh news, special deals and other information useful to them.
Never underestimate the power of the internet. You can be sure your competition is using it.
6. Ignoring SEO Techniques in Internet Marketing
If you decide to use a website or blog to promote your business, then you must understand some basic SEO principles. Search engine optimization refers to designing your website and its content to get it listed on Google and other search engines. Keywords are important, but you should not overuse them. When planning a business, you should be able to write about that business on a web page.
SEO is important, and you can learn more about that from Google itself. Check out the Google Webmasters Support site to learn more. It is not difficult to follow, but if you feel you need help with SEO then include some expenditure on it in your business plan
Here are some SEO techniques that should not be ignored.
Use of Keywords
Google will use its LSI (Latent Semantic Indexing) algorithm to establish the theme of your web content. This tool analyzes the vocabulary used on each web page to decide for itself what that page is about.
However, you should never write for search engines. Write for your readers and Google will decide for itself what you are writing about. Excessive use of keyword gets punished, and in many cases, all you need is about 1% keyword density. If you keep using the same keywords over and over, you won’t just annoy Google, you will annoy your readers.
Social Media Connects
Never ignore the power of social media. If you don’t have a Facebook business page then get one. Also make sure you have a Google+ page. Not only does social media connect with an ever-increasing number of potential clients or customers, but they can also connect between themselves.
People talk about what they see and also Retweet or Share specific posts that interest them. Not only can you use social media to connect with people interested in what you have to offer, but they in turn pass that information to others, who in turn do the same: get viral with your message and you have a massive amount of free advertising.
Not just that, but make sure you have your website links on your posts and tweets. You may then get links passing all round the web.
These are just two of the SEO techniques that can be used to make sure your web pages are displayed when potential customers are searching for products or services that you can offer. Never ignore SEO – but use it wisely to make better use of what it can offer.
7. Ignoring Finance
Ignoring finance can end your business before it even begins. You must make sure you have enough money to start. If you need to borrow, then your business plan must be good enough to persuade banks that you are a good risk. Only ever get finance from banks or recognized business angels or financiers. High-interest short-term loans can result in you losing everything.
That’s why your business plan should be properly prepared – even if you have to pay to have it done. Finance is very important, but never borrow more than you need to get started. Check up whether you qualify for any ‘new start’ government business loans. There are some other ways of finding finance for a new business.
When planning a business it is important to give yourself the best possible chance of success. Your plan should take into account the reasons why some businesses have failed, sure, but it should also consider why many have succeeded. Avoid failure and follow success.
The above tips should help you avoid the major factors ignored by those who failed, but they should also point you in the right direction for success. Your business plan should be your roadmap to succeed. These seven tips are your shortcuts to avoiding failure and attaining that success.
Sonal patil is a research analyst at Market.Biz. She is keen to handle and use market data for developing marketing strategies.Apart from this she loves to travel and explore distinct places. Besides all this you will find me all time reading and learning new things.