What NOT To Do While Starting Your Own Business
Starting your own business can be extremely exhausting. In the initial days, you have to wear multiple hats, from being the owner, to technician, manager, customer care and sales rep. Given the level of work and effort it takes to be successful, one needs to be careful of what they do and what they don’t do. There are dozens of books and blogs that teach you the tricks to grow your business.
Here are some tips on things that you should NOT do, in order to succeed.
Targeting A Demographic Based On Stereotype
Let’s say you sell gaming accessories. Mainly you could be targeting boys between the ages of 12-17 for your marketing campaign. But do you know that 94% of girls in this age group play video games too? Also, there is a small percentage of teenage boys who do not play video games. As a start-up that bootstraps marketing campaign, you should strive for maximum return on your investment. By targeting your product based on stereotyped demographics, you fail to reach out to your target audience and could potentially lose money marketing to people who do not need your product.
Skimp On Critical Software Tools
As a bootstrapped start-up, it can be tempting to save money by finding alternate solutions to regular software and applications. For instance, you could replace Microsoft Office with Open Office. Also, you could potentially replace paid accounting software with a free MS Excel plugin. These are not necessarily wrong. But if you are not savvy enough with the alternates, you should realize that the change comes with a huge blow to productivity. With the advent of cloud, even services like ERP and CRM are affordable through the SaaS tools provided by the likes of Salesforce, Netsuite and its partners.
Not Validating Ideas
As a start-up business owner, time and money are both essential and it is important that you do not commit to investing either of them without a certain sense of guarantee that you will recover these investments. A crucial mistake that businesses do when starting off is not validating their business idea or marketing campaign idea enough. For instance, if your plan is to import an innovative form of apparel and sell it to people in your country, first test the idea by buying in a smaller batch. Go for the kill only when you are absolutely sure about the success of it.
Pricing Product Too Low
Are you in a business with brutal competition? It can be tempting to price your product lower than the competition in order to win business. But this does not work all the time. By pricing your product lower than your competition, you put yourself in the hands of the price sensitive customer. It’s not a bad thing till your larger competitors decide to wage a price war by going all out on discounts.
The strategy, in a lot of cases, is to get you to burn your money and go bankrupt. Once you are out of the way the competition would raise prices once more. This strategy is lose-lose on so many levels. Primarily, it does not help you reach out to the bigger customers. Also, you shall always be seen as a low-cost product and hence it becomes difficult to raise prices even if you wanted to. As a rule of thumb, always start off with high prices and offer discounts to customers till you get a market share. This way, you can always revert to the high price once you have settled.
There are several other mistakes that one could do while just starting out. It is difficult to encapsulate everything in one article. But the points listed above are the most common and are likely to exist in a majority of start-ups.
Are you a startup committing these mistakes? Tell us your thoughts in the comments below.
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