The fourth industrial revolution, Information, and Technology have brought numerous business avenues to the world and at the same time, it poses considerable challenges to start a business venture. It has been observed that the founders usually commit following seven mistakes while starting a business.
1. DOES NOT PREPARE A BUSINESS PLAN
The biggest mistake committed by an entrepreneur while starting a business is not preparing a thorough business plan. Similarly, without prior research businesses ended up with a debacle. It is important to take few decisions in this regard as; how to reach the destination? How the resources should be allocated? These questions must be answered to carry a venture successfully.
2. LACK OF MARKET RESEARCH
The second biggest mistake is lack of market research. Frequently, a new investor puts his all efforts into what he or she loves to do rather than looking into the needs of the potential customers. It enables an enterprise that what proposition should be offered to the customers that best meet their requirements. So, it’s essential to understand the marketplace and customer needs and wants for a successful business venture.
3. IGNORING CUSTOMERS NEEDS
The businessmen sometime ignore the external factors to the business such as political, economic, social, technological, and legal facets. These all factors have a substantial impact on the business and it’s pertinent to take all these factors into account while starting a business. Environmental scanning provides an opportunity for an entrepreneur to analyze the opportunities and threats masqueraded to an enterprise.
4. FAILING TO CONDUCT SWOT ANALYSIS
The businessmen should understand their strengths and weaknesses so that they can avoid the threats and capture the opportunities brought by the outer environment. The strengths may be the employee attitude, quality services, and unique market offerings, abundance of economic resources, efficient Supply Chain Management, or low-cost production. The smart entrepreneur uses his strengths in capturing opportunities from outside the world.
5. INACCURATE FORECASTING OF FINANCIAL COST
The inaccurate forecast of the financial cost of a business also creates hurdles in the commencement of a new startup. These inaccuracies are caused by multiple factors such as inflation, interest rates. So, incorrect financial forecasting is another mistake committed by the founders of a new business. The best business practitioner will try to convert these weaknesses into strengths.
6. UNABLE TO IDENTIFY POTENTIAL CUSTOMERS
Another biggest mistake is failing to identify potential customers. At the start of business, the founders are unable to identify potential customers due to poor research. Even a tiny mistake may take the business out of the market. Usually, investors feel the reluctance to make an entry in a new market with a new product owing to several factors. Good market research can fill this Grey area.
7. ENTERED INTO A MARKET AT WRONG TIME
Most businesses fail due to entry into a market at the wrong time. Research indicates that the businesses which make the first move have high chances to grow at a faster rate and capture a major portion of the market share. Economic downturn or recessionary trends can also be termed as a wrong time for a business to make an entrance. However, with entrepreneurial skills entry can be made at right time.
In nutshell, first time founders should be very careful while starting a business. Furthermore, they should also keep improving and changing because those who cannot change might fail. This is evidenced by the Nokia that failed to adopt the change and was replaced by an android. Therefore, it becomes necessary for an entrepreneur to consider and avoid all possible mistakes that are usually made by a person while starting a business.