Starting a business? Avoid these classic entrepreneur pitfalls

January 01, 2020

Written by: Atul Oka, Senior Director of Strategy and Business Development, DUKE Heights BIA

Becoming an entrepreneur is a dream to which many of us aspire towards. There are many first-time entrepreneurs as well as experienced pros who sometimes make the same typical mistakes despite their best efforts. When you are finally ready to take the step and dive in, it may be worthwhile to keep an eye out for these common issues which could make or break your dream before it is fully realised.

Not creating a business plan is perhaps one of the most devastating mistakes a business owner can make. While sounding like something only larger businesses, or those looking to rise capital through traditional lenders need to do, a business plan allows you to think holistically about your business and assists in identifying potential issues in your idea.

Before starting any new venture, draft a simple business plan that identifies your proposed product or service, the costs involved, your funding needs, your competitors and potential customers, the market opportunity, and any realistic challenges you envision. If a business plan is just too complex to start with, try the simpler Business Model Canvas to get you started.

If you have not already completed a financial and cashflow forecast as part of the business plan, it may be worthwhile spend some time doing that now. While forecasting is not perfect, it will help you better manage and plan for your businesses funding needs. Some entrepreneurs misjudge costs, and end up spending more than they budgeted for or expected to, while others do the opposite and by trying to be careful and frugal, end up spending too little to give their business a realistic chance.

Another common challenge for any start-up is the selection of business partners. In many cases, you are not able to successfully launch a business venture on your own. You often need to rely partners and investors. Once major risk to any new business is in bringing onboard too many people. This can lead to the dilution of profits and sowing confusion on the business strategy. While key partners bring their own expertise, the old proverb about too many cooks still holds true.

Knowing your market and effectively marketing to that market is critical. Make sure you know who your target market actually is. Is there a specific client profile that needs and wants your products or services? Are you trying to sell your delicious abalone dish to people looking for a quick take away meal on the way home after a hard day’s work?

Know who you need to target your marketing spend towards to minimise wasted spend, but also make sure to target your market in the right way. What format of media does your market utilise and is most exposed to? Is it the “Selfie” generation or is it Mr Wilson from next door who is reluctant to use that Nokia 3310 that his son bought for him over twelve years ago? You know your product or service is useful and has a market. Don’t do your business a disservice by not letting the people who need it the most know.

Entrepreneurship can be the adventure of a lifetime but, like any adventure, it can also be fraught with pitfalls. Try and create the best possible chance of success for your business by avoiding some of these common mistakes.

3 ways to drive profitability

Written by: Atul Oka, Senior Director of Strategy and Business Development, DUKE Heights BIA
Dec 01, 2019

While most business owners want to increase profits, most do not have a plan to do so. Some say they will increase profits by boosting sales. But how will you boost sales? Will you hire more salespeople? Can you afford more salespeople? Will you leverage additional sales channels through which you can sell your products or services?

Will you try and help any customer that comes to you? Can you afford to do everything for every customer? Do you know which products or services are worth your time to produce or deliver? Do you know which products or services are actually profitable once you take input costs, overheads, salaries (Yes this includes your salary as well), delivery and other costs into account?

Will you perhaps expand to another location or add additional products and services? What will this entail?

It seems that no matter what the initial idea, some thought and planning may be required to make this a reality. This “plan” is often called a business strategy. It could be either a strategy for a specific functional area such as marketing or sales, or alternatively, it could be a complete and comprehensive business strategy. Developing a business strategy can be difficult but it is often the difference between success and failure. If your business does not have business strategy, speak to someone who can help you create one.

Creating a niche for your business is important in making your business different from your competitors and does not force you to compete with large companies with scale, that can offer the same products or services at a cheaper price. Every business should think like their target audience or customers. Know their exact needs, motivators, wants, dreams, goals, and interests. Find out what is valuable to your customers and what they are willing to pay a little extra for. Ever wonder why Starbucks (a normal coffee shop) was able to differentiate enough to grow much faster than their competitors?

Finally, it is important to create internal targets and goals. This helps to determine how well you are doing. One way to measure progress toward achieving your business goals is to use key performance indicators (KPI’s). Another is to use customer satisfaction as a benchmark for external performance and success.

KPIs provide us with an immediate snapshot of the overall performance of our businesses. To be used effectively, we need to measure and track the key performance indicators crucial to the success of our business such as profit margins per product category, and total sales. They also play a key role by providing vital decision-making information. (Do we sell more of product A or Product B? Which one is actually more profitable?)

Customer satisfaction can be measured using the Net Promotor Score (NPS) which we discussed in our last article. Have you done this for your business yet? How high is your Net Promoter Score?

“Profitability is coming from productivity, efficiency, management, austerity, and the way to manage the business” – Carlos Slim