business - Course 4 Step 4
Avoid rookie mistakes
Rookie mistakes to avoid:
1. Insufficient planning - Before you spend any money or effort on starting your business first do some research on the need for the product or service, how much profit you could make, how many you need to sell to make up your salary, who exactly is your target market, etc. Jumping into it without any research is a guarantee for failure.
2. Insufficient funds - If you are going into something big, make sure that you have enough funds to firstly start the business and secondly run it for at least 6 months without any income.
3. Quitting your job - Unless you have the finances, don't quit your job hoping to earn a good salary from day one. If you can , rather start your business while still working and let it grow on the sideline till it can carry you.
4. Starting something with a friend or family member - Chances are very good that the relationship will be destroyed when partners disagree on ways to run the business and how much money to take out. Just because you had the idea together does not necessarily make you make good business partners. In order for it to work the following is required:
a) A tight contract set up by lawers
b) one partner needs to have at least 2% more shares than the other in order to make tough decisions easier.
c) Roles need to be very clear well defined
d) There needs to be strict control of the money - signing powers, bank access, loans against the company, etc need to be discussed and defined.
e) Both partners need to contribute evenly unless otherwise decided.
5. Spending money unnecessarily - Sometimes it is not necessary to go out and spend thousands on equipment. Most equipment and even bakkies can be rented. Sani Fleet Rentals in Boksburg rents bakkies at R5000 a month. If you bought one it would probably cost you more, you would be tied in for 5-7 years and you would still have to insure it!
6. Producing without a market - There is no point in planting 100 hectares of tomatoes if you don't have a contract in place with a customer like ALL GOLD ready to take them from you. If you first plant and then look for a contract the chances are good you will be selling to the market for next to nothing just to get rid of your stock. This principle applies to most products.
7. Not being "tech savvy" - These days if you don't use Facebook, websites, email and online accounting systems chances are very good that you will fail. These tools are absolutely crucial in any modern business.
8. Being unaware of the competition - It is vital to know what the competition is up to, what they are offering, how they are marketing and at what price they are selling in order to be able to compete with them. If you don't have this info you could be over or under pricing your product may be losing many many customers to them.
9. Not selling right - Remember that you need to connect with with emotion in order to sell. You need to make people feel something - fear, guilt, pride, love...anything. So instead of selling face cream, you sell beauty. Instead of selling airplane tickets, sell a lifestyle, an experience. Instead of selling a car, sell safety, luxury, status or thrill. You get the picture?
10. Ignoring your compatibility with a certain business - You may love baking but you may not love working retail hours and being on your feed all day so maybe that home industry shop you want is not such a great idea. You may love fun and holidays but you hate having to entertain people, run after maintenance problems and listen to people complain so maybe owning a holiday resort is not so much for you are you thought it would be.
Think carefully about what exactly the business will entail and decide whether or not your personality, lifestyle dreams and capabilities fit into tat picture.