Five Problems to Watch for When Starting a Business

With the economy currently in a state of decline and unemployment on the rise, the business world is filled with young entrepreneurs creating their own jobs by creating their own businesses. As the number of start-ups in each industry increases, however, the competition in those industries becomes even fiercer.

No one wants their new business to fail- every new business owner believes that it is their will to succeed and their drive to work that will keep the doors open. In reality, scores of new businesses across the country close their doors after only months of operation. No matter how strong your desire to succeed, success is only possible if you have all of the necessary tools to keep your business running.

This article will point out five problem areas typical of new businesses, and how to make sure that your business does not fall prey to these issues.

1: Lack of Business Knowledge or Management Skills

Ultimately, a business’ greatest strength or weakness is the owner’s ability to make canny decisions and appropriate judgement calls. Gut instincts are good, but nothing replaces a working knowledge of the different aspects of a business, and how each aspect should be managed and organized. If you don’t understand your business inside and out, you won’t be able to run your business for maximum efficiency, and that will endanger your profit margins.

2: Setting Overly-Ambitious Goals

People who are new to running their own business often over-estimate their initial profits, sales, and market penetration. It’s easy to say “Only 10% of my market would need to buy my product in order for me to become a millionaire!” because the percentage sounds so small- but only a thorough and accurate feasibility study can tell you what you can expect in terms of sales and market penetration in any given period of time. Market data is key, especially in the early days of a start-up, without previous numbers to use in projecting future earnings.

3: A Poor (or Non-Existent) Business Plan

Though it sounds hard to believe, many people start a new business without first creating a business plan! That’s like beginning construction of a house without a blueprint. The business plan provides a solid guide for many years to come, reminding you of your business’ goals, plans, and structure. A good business plan doesn’t just cover the nature and size of your endeavour- it includes goals for the future and the objectives for success.

4: Lack of Support

No matter how “small” your small business is, you can’t do it all on your own. A healthy business needs support of all kinds: financial reserves, equipment backup and repair, and people to help should business get overwhelming or you fall ill. Not all of these types of support are created equal: capital is the most important type of support your business can have. Capital can help you afford the other resources you don’t have, and also give you the ability to purchase prototyping, research, and equipment. That doesn’t mean you have to be rich already to be an entrepreneur: raising capital through investors can be difficult, but it’s never impossible for the go-getter with a great idea and an airtight business plan.

5: Lack of Ambition and Drive

Many people who dream of owning their own business dream of setting their own hours and enjoying the good life once success is theirs. That dream can be a reality, but only after an incredible amount of hard-work and determination. Owning a business is easy: running a successful business is hard. Look deep inside yourself and see if you really have the determination and the faith in yourself to keep going, no matter how hard it gets or how many obstacles stand in your way. Knowing yourself, your strengths and shortcomings, and what it is you truly want will take you a long way in business as well as in life.

Despite the difficulties in the economy, now is a great time to be a young entrepreneur. There is always room in the marketplace for another brilliant idea, sharp mind, and useful product. By avoiding these five problems, you can be sure you’re giving your business, your investors, and yourself every opportunity for success.