Mistakes are a part of life. Nobody succeeds 100 percent of the time. Even the greatest of the great are familiar with failure.
However, there are some mistakes that are more avoidable and predictable than others. In this post, we run through the most common errors made by newbie founders and how to avoid them.
Ignoring Cash Flow
Cash flow is the most important financial indicator for your firm. It tells you whether your enterprise can afford to make payments to suppliers and employees to keep it in business.
Unfortunately, some founders don’t keep track of their cash flow. So, one morning, they wake up and see that they have no money in their account to continue paying for the running of their business.
Lack of profitability here isn’t always the issue. Usually, companies have a lot of money in their accounts receivable. It’s just that they haven’t got it yet, forcing a cash crunch.
Failing To Take Exchange Rate Volatility Into Account
Exchange rate volatility can wreak havoc with your profit margins. Even small fluctuations in the relative price of a currency can lead you to begin making losses overseas.The trick here is to learn how the currency markets work. Whenever you trade forex, you are purchasing currency at its current market value. However, you can fix prices in place with your suppliers via contract ahead of time to reduce the risk of wild changes in relative prices. This helps to smooth over volatility and helps all parties – buyers and sellers – gain more predictable income streams.
Offering Too Many Products Too Soon
Ideally, companies should try to make themselves known for one or two things. Excessive dilution of brand and products can confuse customers, particularly if your company is new. Don’t try to please everyone. Just focus on a specific group of customers you know you can serve.
Failing To Engage The Community
New companies sometimes imagine that people will seek them out automatically. But, again, there’s no guarantee that will happen. That’s why things like freebies and contests are so important. Events like these naturally attract people to your brand and can be a great way to introduce them to what you do.
Trying To Do It All By Yourself
Trying to build a business all by yourself is a tremendous challenge. It also goes against the purpose of creating a company in the first place. If you insist on doing everything yourself, you don’t take advantage of the unique skills and talent in your organization. Your enterprise becomes inefficient.
Where possible, delegate. Give other people responsibility and autonomy. Just focus on the things that you can control, such as your hiring decisions. Don’t get involved in the minutiae of management. Let others grow and develop independently so that they become more competent in their roles.
Failing To Understand What Customers Want
Lastly, some newbie business founders fail to understand what their customers want.
Start by building a customer profile. Then carefully monitor customers to discover what it is that they really love about your business. What itch are you scratching for them?