SO YOU - a budding entrepreneur - have finally decided to start your own business. But bear in mind the common pitfalls everyone should avoid at all cost. There are 10 things one should take heed of when starting a business.
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1. Don't constantly change your business model
As a new business owner, you cannot afford to spend time reinventing every process in your business.
Your resources are probably limited and your focus should be on revenue generation. Stick to standard business processes and improve on them along the way. Avoid experimenting with processes if they are already working for you.
2. Being on the job rather than taking care of business
Many entrepreneurs get too bogged down with the operations, rather than in the management of the whole business. It is only natural that you would want to work in areas of your business that you understand best.
Yet as an entrepreneur, your job is not to specialise in any one aspect of your business but to manage your company. While it is important to get involved operationally, your ultimate goal is to grow your business.
3. Don't leave the running of your business to others
It is common for business owners to delegate key areas of their businesses to experienced partners or employees. However, key decisions must still be made by the owner.
The responsibility of running the business is still yours. You are accountable for the success or failure of your business. You can pass on work, but not leave it to others to make important decisions for you.
4. If you think small, you will remain small
If you model your company to sustain only your income, you will never grow big and expand your business. Many entrepreneurs start a business with the sole purpose of creating that dream job for themselves.
True entrepreneurs always have big visions that go beyond their limit. They imagine how they can make the world a better place with their product or service - and work towards it every day.
5. A cheaper price doesn't mean more customers
Competing on price will not garner more sales. Offering a lower price does not mean that customers will switch from your competitors to you; it's product or service quality that people look for.
By offering lower prices, you will have smaller profit margins, translating into a smaller budget for product research and development.
Fighting over low prices will never benefit you in the long run. Solely banking on price adjustments as a competitive edge can be your fastest route to bankruptcy.
6. You get what you pay for
Cost-cutting on every aspect of your business, especially for staff, can be detrimental to your business.
Hiring employees on the cheap may appear to save you cost now. But you will be paying more in the long run by losing the opportunities you could have obtained with the right people supporting you.
Talented and capable staff would not want to be paid less than their market value. Don't compromise on the quality of your staff.
7. Cost-cutting damper efficiency
The key is not about cost savings, but to balance out a cost-benefit ratio on everything you do.
Instead of paying people to help you, you choose to do it all by yourself. You avoid using new technology that is deemed too expensive and prefer to keep that old machine, not counting that it actually costs more than buying a new one due to high maintenance cost.
Being efficient is a must for every start-up company where resources are limited, but you should not focus on cost-cutting as a business growth strategy. Instead, you should focus on bringing in more revenue that will cover your cost.
8. Don't focus on just one aspect of your business
Every business needs three legs for it to run: marketing and sales; administration and finance; and operations.
Entrepreneurs who are born salesmen will believe that sales is the most important aspect of their business. Entrepreneurs with experience in operations may believe that a solid business process is the key success factor for companies.
Every business requires marketing and sales, finance and administration, and operations. All of these areas are equally important and it is up to you, the entrepreneur, to balance them, regardless of your field of expertise.
9. Have a proper yardstick in place
Without proper reviewing processes, a business will not have a clear view of its current strengths and weaknesses.
Many business owners rely solely on their instincts to make business decisions. The true entrepreneur takes advantage of data available to help him set appropriate goals, measure the company's performance and implement necessary measures to bring the business to the next level.
10. Work towards a long-term relationship with customers
Relationship management is essential to the survival of any business. Entrepreneurs often make the mistake of chasing after new customers, seeing potential only in new, untapped markets.
Previous customers can often bring in repeat or referral sales which are just as important. Building a good customer relationship management system in your business can help generate additional sales from existing customers.
Having a good business relations framework is also important as it upholds the image of your company for long-term success.
The writer is founder and managing director of Talentpreneur Hub, an independent company that promotes entrepreneurship in Singapore.
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