While there isn't a fool-proof plan for startup success, there are several common and risky mistakes new home-based business owners make that can negatively impact growth. Here's our list of four small business mistakes to avoid:
A good idea does not a business make. That's why you really need to create a business plan before you plan your grand-opening festivities. Just as you can't construct a house without blueprints, you can’t successfully launch and run a home-based business without a detailed business plan. The beauty of having a plan is that it helps you avoid business risk. You won't be left guessing and panicking when the time comes to find a new vendor, pay your employees, or deal with unexpected inventory problems.
The basics of a good business plan include factors that form the backbone of your company. Make sure your plan answers these questions:
- Where is your initial funding coming from?
- How will you allocate your budget?
- What kind of profits are you expecting and when do you expect them to start coming in?
- What’s your marketing strategy?
- What are your staffing needs?
- What is your plan for day-to-day operations?
Yes, all this sounds daunting, but putting these answers together will create a solid foundation from which your business can grow, no matter what obstacles may come your way. Here's a great template to get you going. Get feedback from peers, business partners, and your local SBDC, and then get work implementing what you’ve put on paper.
Under- or over-valuing products or services
Before you set your prices, you'll need to do the research to find out what your local and national competitors are charging. Find out where you fall in the spectrum of startups with similar offerings. How does your product or service compare to your competitors? If you offer that’s something truly unique and impossible to find elsewhere, you can and should justify raising your fees above market price. Just make sure that this reasoning is made clear in your marketing materials.
Remember that underpricing yourself could make your product or service appear to be of lesser quality and give your new business a negative reputation from the start. Set your price point fairly, but at a level where you can be proud of your business. Knowing your worth as an entrepreneur is a priority — but knowing the worth of your business is just as important. Depending on how high or low your price point is, you can always drop the cost temporarily with sales or discounts or bring in more revenue by offering add-ons.
Not taking advantage of new technology
Are you using technology to your advantage? If not, you could be missing out on growth and opportunity. In our quickly-evolving digital world, getting stuck with out-of-date or slow tech tools could make or break your business. Advancements like cloud storage and digital automation can streamline processes and reduce risk.
Technology is important for your customer experience, too. Perhaps people are calling your business line and not getting through. Or, you're placing customers on hold for so long they hang up before you get back to them. We know, you're only a small startup, you've only got so many hands! But you can portray a big business image when you upgrade to a business phone system, like Comcast's Voice Mobility solution.
Show your customers that your company is tech-savvy and make it easier for your customers to buy from you by incorporating new tech tools into your business. It's a lot easier, and less costly, than you might think.
Not understanding your customers
Who is your target market? You can't completely define your product or service until you know this. This should be part of your business plan, and it should be something you keep in mind every day as you strategize to serve your customers. When you created your product or service, who were you thinking of as the end user? Identify the different demographics who will be interested in your business now — but also think about who might benefit from your product or service if you modified it or added something to it in the future.
Depending on the kind of business you operate, you might be able to easily expand your customer demographics — and your bottom line — with one small change. As any marketing professional will point out, you need to have a detailed customer persona in mind as you create your advertising materials.
Starting a home-based business will inherently involve some risks — that’s what makes the rewards all the more exciting. But you can minimize your risks with the proper preparation and by avoiding these common mistakes. See how Comcast Business can help.