Do you plan to start your own Home business? That’s great, because a thriving open economy grows with the help of independent entrepreneurs. The flip side of the situation is that the greatest majority of small businesses fail during the first year after the start-up, leaving the entrepreneur in debt, disappointed and struggling to find another means to make money.
All home businesses start with (presumably) good ideas with every chance of success… so why do these businesses fail? In most cases, the business owners make a few critical mistakes, which do not seem very important at the beginning. However, these are the main causes of the upcoming downfall. Here they are:
1. No Long Term Plan
Starting a home business is like raising a castle. You need to think further than the foundations. How do you plan for the first, second and third stages of growth? At the beginning, it is a sole journey of managing your Internet business from home. After a while, you will need employees. Possibly, you will expand the area of providing your services and selling your products. Have you considered the logistics of your business expansion?
The moment of failure usually happens when your business is just ripe enough for growth. If you do not have a plan, including where to get your funding to invest in the expansion of your business, it will dwindle back into anonymity and disappear.
2. No Idea Who the Customers Are
Who are your typical target customers? Are they male or female? Stay at home moms or busy professionals? Do they exercise and keep a healthy lifestyle, or do they enjoy beer and chips while watching the game on TV?
Your marketing and advertising must be developed in line with your customers’ preferences and lifestyles. Otherwise, they will not be appealing to them. They will not feel like you address them and have a solution for their individual needs and problems.
3. Teaming Up Without Paperwork
Sometimes, you want to include a friend or family member in your business, because your skills and talents are complementary. This is a great idea. However as you start your own home business, you forget to draw a partnership agreement which states the assets that each of you bring to the collaboration. This is wrong. In time, it may cost you the business and the relationship with the friend or relative.
Maybe things go bad and you want to cut your losses. Or maybe your business partner loses interests and wants out. In either case, without a drawn agreement a bitter fight about who is entitled to what will ensue.
4. Not Keeping a Clear Track of Money
Accounting issues are not pleasant. Very few people actually enjoy spending time in front of a spreadsheet containing payables and receivables (and many of you who want to start your own business may not know what they are). You must keep track of every transaction, whether you received payment for the products you shipped, how much you owe in taxes, what you can deduct… Using accounting software is great for the very beginning, but as your business grows you should consider hiring an outsourced bookkeeping service.
5. Not Anticipating Changes
If there is one permanent thing in our world, it is change. Market conditions change, people’s finances and preferences change. If you fail to adapt the goals of your business and the products or services you provide to these changes, your business is doomed to fail. You only need to look at the Polaroid brand, which practically disappeared after people switched to digital cameras to see an example of this.
These top mistakes ruin a lot of promising businesses. Avoid making them after you open your own home business and you may be on the road to becoming the next Steve Jobs or Elon Musk.