Ways to avoid common business pitfalls

Going at it alone is a big step, especially if it’s your first time. You may be juggling a full-time job while working on your business dreams, working long hours and worried that your business won’t make any money. Or, you might worry that if your new venture isn’t a roaring success straight away, friends and family may think less of you.

In short, it’s stressful. But handling the pressure becomes easier when you have a few tools up your sleeve to help ease the burden:

• Take time out when you need to (this is easier when you have capable and trustworthy people on staff). Retaining a balanced lifestyle will help you focus better when you need it. 
• Make time for family and friends – having people to talk to who are in your corner and want you to succeed can make a real difference to your state of mind. 
• Don’t let initial setbacks get you down – keep a long-term view and don’t put unrealistic pressure on yourself. Many successful businesses have had a string of failures along the way, but it’s what they did afterwards that counts.
• Don’t feel like you need to do everything yourself. Delegating, using outside advisers, and building business networks are vital for helping you manage your business effectively and see things from different perspectives. 

Many start-up businesses suffer severe peaks and troughs in their revenue streams. One month they're flat-out on a project, the next it’s over and the cash flow has dried up.

Often the business has expanded too quickly, e.g. taken on staff or moved to bigger premises. As a result, you now have a bigger payroll and greater overheads. In severe cases, this extra load can cause the business to fail.

Here are some solutions to help keep you afloat:

• Keep your focus on continued cash flow, even if you have to delegate other responsibilities
• Continue marketing at all times – especially when you’re busy
• Be wary of expanding too quickly – have sustainable long-term revenue streams locked in first
• Think about whether contracting out is better for your business instead of taking on permanent staff and overheads straight away
• Create good systems to ensure your business runs efficiently. 

Many start-ups fail simply because they haven't done their homework first – and that means conducting plenty of market research.

It may be fine to go with your gut instinct for a while, but proper research is the only way to find out whether your product or service has a market, who your target market is, the advantages your competition has – and how you can position your business to beat them.

Don’t try to be everything to everybody – you could waste a lot of time, effort, and money marketing to people who are unlikely to buy your product anyway.

Instead, define your target market and focus on them. Understanding where they live, what their interests are, and what they read or watch will help you target your marketing to the right people. 

For help defining your target market, see our article on the importance of market research.

You’ll work hard to attract customers, so it makes sense to keep hold of them. Some businesses fail because they spend all their time attracting new customers, while ignoring those they already have.

To retain your valuable customers and also gain referral business, put a customer retention plan in place. Think about the lifetime value of your customers and how to get them to spend more.

Online marketing is a vital tool for almost every business and a key part of that is your business website. It doesn’t have to cost the earth if you’re smart about the way you use it.

Some businesses make the mistake of thinking that just because they don’t sell their product or service online, they don’t need a website. But even if you don’t want or need an online storefront, you can still use your website to build up a database of leads. 

These days, many customers like researching before they buy in a physical store. If it’s a service you’re offering, giving your customers the ability to book online whenever they want – and wherever they are – is a lot more convenient. 

People are your biggest asset. Keep your workforce happy and they’ll ensure you stay competitive – and attract more great people to your business, too. If you don’t invest in your staff, you run the risk of high turnover and low morale, which can cost your business dearly.

Before you take on your first employee, think about how you can motivate them to help you achieve your business goal. 

Ensure your business has a vision that everyone can believe in and offer their input. Give them responsibility. Recognise and reward them when they do well.

You might also consider providing key staff with either a profit split, or some attempt to reward consistent effort. Even setting short-term goals and rewarding people with a half-day off can work wonders.

Starting a business can be one of the most exciting and satisfying journeys you’ll go on. For help getting started, check out the ANZ Business Start-up package.