Many people who decide to go freelance do not realise quite how much work and time will be involved.
They have a vision of freedom and success and leap straight into launching their business.
Execution toward a clear vision is important, but if you fail to carry out any primary research you will quickly become overwhelmed.
Perhaps the first question to ask yourself then is whether you are in fact ready to start your own business.
Do you have an entrepreneurial mindset?
Are you ready to take massive action and committed to spend all the time you need to succeed?
At first, you will have to wear many different hats in your business.
You will be the CEO, the general manager, the accountant, the salesperson, the computer technician, the secretary, and the receptionist.
You must therefore prepare yourself because, no matter how well you start out, there will be days when you are disappointed, depressed, or frustrated.
You have to realise that is it very rare for lasting success to happen overnight.
It may take a year or two before you achieve your expected results.
But there are twelve very common mistakes which I see new business owners make time and time again.
Read carefully below, because knowing what these mistakes are, and how to avoid them, will greatly increase your chances of success.
Mistake #1: Not Researching the Viability of your Business Idea
Over the years I have worked with several new entrepreneurs who failed because they were not truly interested in their business; they were only interested in making money.
It is important to start something that you really like, because you will be spending a lot of time on it.
You need to set yourself a mission and be passionate about it.
Examples of missions are:
- “Teach 10,000 people the best way to save for their retirement.”
- “Forever change how people identify and deal with stress in their life.”
- “Help companies create life-changing Digital Health products.”
- “Stop students from dropping out of college.”
- “Show men and women how to turn pain into their highest potential”
When you are focussed on your mission and actively help people and companies, the money becomes a natural by product.
Spend all the time you need working on your business plan.
Your plan should include:
- your mission statement,
- your business strategy,
- research on your target market (demographics),
- industry analysis (size, economics, trends, success factors, challenges, etc.),
- your marketing plan,
- your financial projections and sales.
Mistake #2: Not knowing how your business adds value
A sustainable business, one which will withstand the test of time, is one that delivers value by performing a service that people need.
You might spend hours, days, weeks, preparing a product which just has no demand.
There is no point being the world’s best fax machine sales professional once the world has moved onto using email.
Make sure your products or services provide value and benefit to your clients. Be ready to solve any business problems that your clients may have.
Mistake #3: Failure to gain a complete and total understanding of the business
Every business has drivers; hot buttons and key levers.
What drivers exist in your business?
Many business leaders, executives and management consultants would say that success largely depends on attention to detail.
Understand all the aspects of your business, and of particular importance, know how to present them in an easy and simple manner.
Mistake # 4: Failure to describe the business in only one or two sentences
No doubt you’ve come across an entrepreneur whose business is so technical, whose service is so complex, that she cannot explain the concept in plain English.
Or, it takes 20 minutes to convey the purpose of the business.
That you struggle to grasp the problem which they claim to solve.
What value or benefits does your business offer?
Have an efficient 15 to 60 second elevator pitch that introduces you, your business mission, focuses on the benefits you provide and makes you and your business memorable.
Mistake #5: Failure to conduct primary research
There are many great ideas for delivering value and earning revenue.
But the key in business is to make sure your idea, the central theme or mission of your business venture, can attract customers and generate profitable sales.
A great idea in and of itself is not enough to start a business.
Customers have two basic motivations for making a purchase.
To be free of pain, or
To obtain pleasure.
You need to study the market demand for your products and services.
If you cannot identify a clear pain or problem your business will resolve, if your products and services do not provide a source of pleasure, you might find it hard to persuade anyone to buy from you.
Understand the motivations why someone would buy your products and services.
Then measure how many people have displayed that motivation by seeking out similar products and services from others.
Take the time to gain experience, study the business, understand what makes the business work (how to serve the customers and generate profits) and what leads to losses.
Mistake #6: Failure to contact professionals who can help you get started
Who do you turn to for advice when starting a new business?
Some new entrepreneurs ask their friends and family.
If your friend is a successful businessman, they may be able to offer help.
If your family member started and runs a profitable company, the too might be a good source of advice.
But there is no point seeking help and advice from people who have never started, or run a business.
A person who has only ever been an employee of someone else is not in a position to offer the sound advice you need.
Seek out a mentor or two.
Surround yourself with experts who possess skills and expertise that you lack.
Team up with professionals who can complement your strengths and cover for your weaknesses.
Mistake #7: Underestimating financial requirements
Do you know how much capital you need to start your business?
Do you know your market?
Did you calculate your cost?
Did you project your sales?
Do you know the number of clients you need to sustain your income?
Do you know how long it will take before your business is in profit?
Will that be before you run out of money?
How do you know when that will be?
Invest the time to work on and set metrics for ALL aspects of your business before you start.
Mistake #8: Failure to make marketing a priority
Many new entrepreneurs start their business without determining their target, niche and demography first and as a result struggle to attract clients.
Marketing should be one of your top priorities.
Devising a marketing plan will help you determine how to promote your products or services and create a system that will generate more clients for your business.
Dedicate a good portion of your time and energy to working on and implementing your marketing plan.
Set up a meeting with yourself once a week to work on your marketing plan.
Whatever happens, never cancel this meeting.
Execution of your marketing plan is essential for your business to succeed.
Mistake #9: Under-budgeting the marketing costs
Publicity is essential to your livelihood; otherwise you will not attract any customers.
But the world is already full of other businesses, all seeking customers.
If you are in a crowded market, many others could be delivering essentially the same functions as you do.
To stand out from the crowd, you have to differentiate yourself.
You do this by making your business value clear to your market.
Make sure you have a strategy that puts the word out there.
Provide adequate publicity, business cards and marketing materials that project a professional image.
Don’t try to save money on marketing efforts; they are the public representation of your business.
A cheap business card, poorly designed flyer, or janky website will destroy your professional image and undermine your authority.
Mistake #10: Failure to focus on the business
Entrepreneurs tend to be energetic and enthusiastic people.
These qualities are essential to success.
But the typical entrepreneur can also be overly optimistic, take on too much, pursuing too many targets and directions at once.
When your time and attention is thinly spread over many diverse activities, it will results in mediocre results.
In assignment 1 you defined your business mission as succinctly and narrowly as possible.
Stick to that mission.
When you move in too many directions at once, especially in the early days of your business, you are likely to fail to execute anything correctly.
You end up working in the business, instead of on your business.
In other words, you will spend all your time operating each task on your own.
You won’t have the time to sit back, think strategically, and decide on the best way for your business to develop and grow.
Know you goals. Put them in writing.
Make sure they are realistic, specific and measurable and that you set yourself a deadline to achieve them.
Take time out work on your marketing plan, create new products, or improve your services.
Mistake #11: Over-marketing
Once you have developed your product or service and have perfected your offering, you may think that it is the best, and that everyone should buy it.
Unfortunately, to be efficient you can’t sell to everyone.
You may be the best dog-trainer in the world, but you can’t sell your service to someone who doesn’t have a dog.
You need to select a specific target market and stick to it.
By doing this you will have a more efficient message and will more likely achieve success much sooner.
Carefully determine your niche, your demography, your ideal clients.
Understand where they are and where they go.
Find out what they read, what their hobbies are, etc.
Once you have a full understanding of your perfect client profile, you will then have a full understanding of how and where to find more of them.
Mistake #12: Failure to follow-up with clients
In my experience, this is the most expensive failure of them all.
Many new entrepreneurs I meet are so desperate to constantly find new clients that they neglect the clients they already have.
It is proven that once someone has made the decision to purchase from you once, they are most likely to do so again.
Marketing statistics repeatedly show that it takes seven more interactions to secure a new client than to sell more to an existing client.
Put another way – acquiring a new customer can cost five times more than selling again to an existing customer.
Because of the cost of advertising and client acquisition for new clients, just increasing your sales to existing customers by 5% can increase your profits from 25-95%.
Your existing customers have already formed a conclusion about you.
If you have served them well, they already know, like and trust you.
This is why the success rate of selling to a customer you already have is 60-70%, while the success rate of selling to a new customer is as low as 5-20%.
So if you exert all your effort and attention on securing a new client, you could neglect your existing customers and end up losing business.
The key to success is to develop and maintain a useful and organised follow-up system which constantly offers new services to your clients.
Constantly and consistently communicate with your current clients.
- Start a newsletter.
- Offer special sales.
- Create new products to upsell.
- If you don’t have your own products, join affiliate programs to resell the value of others.
People who have already bought from you will appreciate it when you recommend other products.
It is essential to build a very, very special relationship with your clients.
They are your best audience and most valuable asset.
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