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Starting a New Business? Make Sure to Avoid These Four Pitfalls

Updated: Dec 20, 2021

By Alexandra Teeter

Far too many entrepreneurs get carried away by the rush of starting a business, only to struggle later and always play catch up to targets and expenses. To help you avoid making this mistake, this article written for Compass & Clock will take you through some effective ways to avoid common business pitfalls.

Not Making a Business Plan

To avoid aimlessly running your business, create a well-thought business plan which includes the following aspects:

  • Executive Summary: A brief overview of your business including a mission statement and products/services you plan to offer.

  • Business Description: Include an in-depth description of your organizational goals, product offerings, and unique features that set you apart from the competition.

  • Competitive Analysis: List your organization’s strengths and weaknesses in comparison to the competition.

Not Selecting a Niche

As reported by Chron, catering to numerous markets will lead to inefficient utilization of resources reducing your ability to make profits. Here’s how to decide on a niche and use resources wisely:

  • Conduct thorough market research to gain inputs on customer trends, needs, and wants to pinpoint an area of underserved customers.

  • Plan how you can cater to them better than the competition.

  • Market your products extensively and provide exceptional customer service to garner a strong customer base.

Inputs regarding your niche will also be an essential part of your business plan.

Not Having a Financial Plan

Mismanagement of funds is one of the biggest reasons for small business failures. To keep your business’s financial health in check, follow these steps:

  • Create detailed financial projections to outline utilization of resources to cover short and long-term business expenses.

  • Include sources of funding you will utilize which can include business loans, saving, angel investing, crowdfunding, etc.

  • If you lack the expertise with numbers, hire an accountant to oversee your finances.

Not Having Clear Communication

As reported by CMSWire, ineffective communication cost businesses across the country $400 billion over the last few years. To avoid your business becoming a contributor to this stat, maintain clear and timely communication through:

  • Regular meetings with employees

  • Creating meeting minutes of all business conversations

  • When sharing important documents with suppliers, clients, and other stakeholders use software to compress a PDF online to minimize confusion and loss of information

Avoiding these business pitfalls will help you set achievable goals, use resources efficiently, outperform your competition, and set your business up for success.

Article written by Alexandra Teeter for Compass & Clock. Photo supplied by Alexandra Teeter (image source Pexels). Alexandra Teeter is a work-from-home (WFH) wellness expert.

She created to help the growing population of remote workers succeed at their home-based jobs or businesses and feel great while they do it.

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