As soon as people like a business idea they get excited to get it up and running immediately. While this is definitely the kind of enthusiasm you need to start a business, in a rush you may overlook some of the common pitfalls that comes with launching a business. Whether you don’t know how to make the most of the advantages of GST or don’t have a clear idea on how to price of your products, these pitfalls will almost always lead to some or the other kind of loss. So here we will share with you a list of some of the most common pitfalls that people overlook:
- Having the wrong business structure:
Many entrepreneurs want to be sole proprietors for many reasons like no tax filing, no additional registration etc. But it has its own disadvantage. If you want to raise money for your business, you need to convert your business into a Pvt Ltd company. In case something happened to you (accident/injury) again you will have to close down the business because there is no one else who can operate your business. Also, you can’t separate personal liability with business liability as a sole proprietor. You will have to pay out of your pocket in case something goes wrong in the business.
- Inadequate Capital:
Capital is another critical tool for business success. Without adequate capital (money) your business will not succeed. Many businesses fail because they run out of money before they can make money. Make sure you give yourself a cushion for unexpected costs and for the time it takes many businesses to become profitable. Additionally always ensure that your initial list of expected or projected costs is thorough. It should include everything from GST on laptops, if you are going to buy laptops to the costs associated with registering a business.
- Sourcing Cheap Materials or Cheap Labor:
The quality of what you sell or provide as a service is important to customers and clients. Remember also that your business reputation is on the line every time you do something for someone else in your business name. Saving money by sourcing cheap materials or cheap labour may cost you more in the long run than just paying more upfront to get better quality and more reliable suppliers
- Not hiring the right people:
When you hire someone, make sure that he/she is qualified enough for the position and can add value to your company. Hiring is not just about filling positions or finding employees. It’s also about making sure that your business progresses and flourishes because of the people working for you. If you’re unsure of how to hire the best employees, there are staffing agencies that can help you with it. They can provide you with only the most competent people who are suited for your company.
- Failure to focus on customers:
Don’t forget who pays your bills –the customer! Most businesses fail because they do not have enough paying customers.
- No Testing and No Pivoting
Many new business owners don’t test their idea before investing time and money into them. They just assume it will work. If you want to avoid failure, you must test your idea before you commit to it. They build prototypes and test them in the market to see how customers respond to them.
When they notice that some elements of a prototype need improvement, they pivot and improve those elements or create a new prototype if necessary.
It is essential to note that pivots do not mean starting over from scratch; rather, it means making changes to your idea based on customer feedback.
- Not Focusing on Retention
We’ve all seen this one happen: a new business opens in town and gets a lot of attention from the community only to close down within a year or two. If a business is only focusing on getting new customers without working on keeping their current customer base, they will fail over time.