We’ve talked a lot this week about taking that first step and starting your own business, and some things you can do as you prepare to launch your new business venture. Part of the question that sparked this series was “Are there early warning signs that things could go wrong”. Here are ten that I can speak to from first hand experience, you probably have others – drop’em in the comments section so we can all learn something.
Sign #1 You don’t know you unique selling proposition (USP)
If you’re starting up, or have already opened your doors for business, and you still don’t know what your USP is you’re in trouble. I can’t stress enough how important it is to know what makes you different, and why people should buy from you instead of a competitor, going into the venture.
Fix: Spend time up front addressing what your USP is, before you launch. Analyze your market, analyze your competitors, and figure out where you can fill holes or gaps in what they do. Don’t open your doors for business until you can tell me in a sentence why I should buy from you and not your competitor. Your USP can change over time, but those changes should be strengthening it, not defining it. Work on your soft skills for face to face sales as well, it’s vital. Futureproof them by investing in yourself constantly.
Sign #2 You have to play with the #’s to “make it work”
Having to play around with your financial projections too much in order to “make it work” is a clear sign of danger.
Fix: Remember that you are creating the most conservative projections you can. If the numbers are a close call on a conservative basis, it may be time to pass on the idea.
Sign #3 You haven’t made short and long term goals for the business
It’s not good enough to open for business and hope for the best. If you don’t have some short term goals to keep you moving forward, and some long term goals by which to steer the ship, you’re sunk.
Fix: This doesn’t have to be a long drawn out process, but short and long term goals absolutely have to be defined going in. Think about what your perfect business looks like in 5 years, then work backwards to today setting goals to get you there. Use the SMART goal process if you need a starting point to goal setting. Don’t worry about being to exact, or shooting too low – remember Costco’s business plan set a goal to expand to 10 stores one day. Had they not set that goal, they wouldn’t have become the 500 plus store chain they are today.
Sign #4 You lack support
If you look around and you have no support structure from a business perspective, you’re in danger. If you have no support structure from a personal perspective, you’ve got big trouble.
Fix: Having the proper support from both a business side and personal side is an extremely important factor for success. Look for role models or mentors to help you navigate the business aspects, and be sure to talk up front with your family and friends to rally their support before you get too far into the planning stage. If you have a significant other, it is critical they are on board to some degree with what you are doing. It will affect their life as much as yours, you’ll want and need them on your side.
Sign #5 You’re having partner problems early on
If you and your business partner can’t decide who gets to sit next to the window without a debate or a near argument, you’re in for it in the long term.
Fix: Before going into any partnership be sure to read 7 Steps to Effective Partnerships. And take the advice to heart, believe me I’ve lived it enough to know what works.
Sign #6 Don’t know your competitors, market, or target customer
If you can’t name your top five competitors, what your market is defined as, or what your target customer looks like, you’re driving blind.
Fix: Due diligence early on is the only fix here. Use what we talked about yesterday to analyze your competitors. Research your target market. And write down what your perfect customer looks like, down to what they have for breakfast. You can’t know too much here, but be sure not to use this research as “proactive procrastination”. Once you have a clear picture, and are comfortable with it, you can move on – But don’t launch without it!
Sign #7 You’re not adequately capitalized, both personally or professionally
If your personal financial house is not in order, you business financial house may never be.
Fix: Be sure you have some reserves personally so you aren’t stressed when the money doesn’t roll in from the business day one. And yes, it is going to take some money to start up, so seek out the lowest rates and best terms you can for the money you need. Don’t over borrow. If anything under borrow and bootstrap.
Sign #8 You’re expecting too much too soon
If you expect, or worse need, the business to be showering you with cash from the second you open the door – you’ve got danger on your hands!
Fix: Understand it will take time for your business to consistently provide you with an adequate return. Expecting, or needing, too much too soon will cause you to push and make poor decisions. If you’ve done your plan and projections as I’ve suggested you know conservatively going in how long it’s going to take to get the cash you want. Also, have your personal finances in order so that you aren’t depending on the business for too much too soon – now that’s a recipe for disaster.
Sign #9 Your marketing plan lacks a plan
Have you caught yourself saying “I’ve got $5000 for marketing, let’s just get some ads out there”? Well, there’s a big problem with that! Not having a marketing plan is wasting your advertising money plane and simple.
Fix: You’ll need to develop your marketing plan early on. It’s vital that your customer acquisition strategy is defined early on, and carried out through your marketing efforts. Here’s some help developing your marketing plan. And some more on what your marketing plan should entail.
Sign #10 Excess creeping in
All right, everything is a business write off – time to get some $5000 office chairs!
Fix: True you’re going to have business writeoff’s, but if you find excessiveness creeping in early on, you need to reign it in. Just because your business is paying for it doesn’t mean you’re not. Keeping expenses under control early is vital to success, if you wouldn’t buy a $5000 office chair at home, don’t buy one for your business either.