Tag: Failure

Business Planning – Reducing the Risk of Failure by Developing a Low Cost Strategy

Many people believe that the risk of failure in starting a business on a low budget is a little high but I believe even a business with low budget can prosper if you can devise an intelligent strategy and stick to it. Just taking care of a few issues will eliminate the chances of failure. The economic situation of today’s world is not the best therefore many Guru’s would not advise you to start a business in a middle of economic turn down. Others have a completely different point of view and they consider this time to be an ideal opportunity to establish your business.

Entering the market at a time with a low budget when many potential competitors have taken their eye off the business ball does make sense. Low budget does not mean only mean spending less but it also means spending wisely.

First thing you need to start a business with a low budget is a fantastic idea. Keeping in view the market needs and customers demand you came come up with a real good idea.. A proper guidance is a must for a new entrepreneur therefore you require the services of skilled business consultant.

Your business does not only require obtaining finance and investment from a financial institution but a carefully crafted strategic business growth plan for a long term success. The strategy can be best designed by you with the help of skilled business consultant.

The start up of the business is the most difficult job because of tight cash flow. So it really doesn’t matter whether your start up investment is a bank loan, investment from some one else or a start up loan. If you can through the first few troublesome months then the chances of long term success are quite high.

The best way to market your business with a low budget would be keep as minimum as possible for advertising. This will help you strive hard to find methods of advertisement that are most economical. About 60% of world’s traditions businesses have their online counterparts this makes it clear that indeed online marketing is the most effective and economical way to promote your business. Most of the online marketing methods are free. Many businesses opt to promote there business through their online website so it would be a good idea to get your self an attractive website with almost all the information about the company and the products and look for economical methods for its promotion.

Business Failure Rate – What is the Real Business Failure Rate and Why Businesses Fail

Ever wondered what the business failure rate is? Between 75% and 90% of all new businesses fail within the first 10 years. If we also take most dotcom startups into consideration, 9 out of 10 new businesses won’t make it to their third year. The actual figures vary according to the source, but it looks like the overwhelming majority of startups end up failing.

In my opinion, in most cases startups don’t fail, they just run out of money. Let me explain.

When they start a business, the first thing that most people do is write a business plan explaining how you are going to promote your business, how you are going to find your customers, and what you are going to offer them. You come up with sales projections and make a lot of assumptions.

If your startup capital is $20,000, maybe you will spend $10,000 to launch the business and promote it. But here is the problem. When you start a new business, no matter how much you think you know about it; you have no clue. Most businesses have to change their business models at least five times during their first year.

Maybe you thought that your target market was stay-at-home moms but they are not buying your products; high school girls are! What are you going to do about it? Are you going to start thinking what is it that you are doing wrong and how to get stay-at-home moms to start buying your stuff? Or you are going to understand that the market defines your business, not the other way around, and change your business model to start selling to high school girls?

Flexibility and observation are two of the most important qualities an entrepreneur should have.

What happened with your target market will happen with almost every aspect of your business. The promotion methods that you thought were going to work actually don’t, you need more employees, and your expenses are higher than you anticipated.

Socrates lived a long time ago, but something he said still applies: “all I know is that I know nothing”. Planning is very important. Making assumptions and forecasts are vital. But don’t think for a second that you are going to get it 100% right, especially if this is your first business.

I said earlier that the main reason why businesses fail is because they run out of money. And they run out of money because they expect everything to work as planned and when it doesn’t they have very few resources left to keep the company alive.

I believe that 90% of the companies would become successful if they could make it through the stage when they are trying to figure out their business model. It is just a matter of surviving until you can learn what works for your business and what doesn’t.

Be humble, you don’t have all the answers. The market is going to teach you what works and you have to keep your eyes open and learn. Instead of investing all your marketing money at once in huge newspaper ads targeted to stay -at-home moms, use that money to test 10 different promotion methods and two or three different target markets. Learn from the experiment. Now you have a much better idea of what you need to do more of and what you need to stop doing.

They say that entrepreneurs have to love risk. That’s not true. You have to minimize risk as much as you possibly can. Isn’t testing, learning, and putting your money where it is proven to work a lot smarter than guessing what’s going to work for you and betting all your funds on it?

Remember, one of two things will happen to your business: you can run out of money before succeeding or you can succeed before running out of money. Take care of every dollar as if it was your own life. Test a lot before putting all your eggs in your basket. You will eventually figure out the perfect business model. Just make sure your money lasts long enough.

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