Without exaggeration, I believe that for every great home-based business there must be at least 10 potential great businesses which failed. And I am not talking here about business ideas which would have never been brought to fruition even by a guru entrepreneur, but about great ideas – innovative, useful and marketable ideas.
The main reason for these failures resides in the critical period between the first time a potential entrepreneur has the idea and the time he acts on it and opens a home-based business. It is a very treacherous path, the one from dream to action, from theoretical idea to taking a hands-on approach to running a business and making money from your idea.
The main purpose of this blog is to help as many entrepreneurs as possible succeed in their business ideas, so today we will discuss the top mistakes which put an end to great home-based businesses before they manage to take off and become profitable. These mistakes are usually related to the failure to grasp what it really means to run a business and to convince people to pay money for your products and services.
Without further delay, here are the main mistakes you must avoid at all costs if you plan to open a home-based business:
1. Undercapitalization
This is truly the biggest reason which kills a great business idea – failing to plan and calculate exactly how much money you need to invest in the start-up and the ongoing operations. Although we have consistently offered advice about opening up businesses which need a small up-front capital, we also advised you to be very careful in adding up all the expenses and achieving a realistic result in terms of how much money you actually need to open and run your business.
If you fail to plan all these expenses, at a certain point you will run out of money to finance ongoing expenses – such as paying for your website hosting, office supplies or raw materials to craft your products. And your business will fail, even though it promised to be successful.
2. Not Investing the First Profits in the Ongoing Operations
You made the first money from your home-based business. Congratulations, but please do not hurry to book an exotic holiday for your family. If you want your business to stay successful and keep producing money, you have to postpone the enjoyment of the early results, and use your initial profits as a cash boost for the business. Create an operational reserve and use it in crisis situations. Invest it in marketing activities, such as social media ads and subscription to a reliable emailing client.
3. Trying to Be Perfect at All Costs
This is one of the main mistakes of start-ups: they try to offer extra value for new clients at really small prices in order to build loyalty. However, when you draw the bottom line, you realize that you are actually losing money. You always have to keep in mind the cost/benefits ratio, and find the right balance between how much you offer your clients and how much you charge for it. Actually, being too cheap will lose you customers – people are mistrustful of “too good to be true” offers, suspecting them to be scams or low quality products and services.
4. Over-planning and Over-thinking
Some business ideas never happen in the real world because they remain indefinitely stuck in the entrepreneur’s mind. And they do happen, they are fraught with repeated interruptions to think things over and change a bit here and a bit there in the business plan and marketing strategy. In the end, the business will fail because the owner is too busy thinking of it and doing too little to actually run it.
5. Ignoring the Competition
Your home business is like no other – or so you like to think. In reality, there are thousands of other entrepreneurs like you, running a similar home-based business, selling similar products or services. If you ignore these competitors and you do not sneak a peek at their social media and blogging efforts, you are missing out on potentially brilliant marketing strategies or discovering your unique selling proposition – what differentiates your business and your products from the competition’s. If you do business as if you were the only one in the universe offering those products, unfortunately you are bound to fail.