If you’re thinking of starting a business or freelance career, you may be fuelled by a heady mix of excitement and trepidation – and a head full of dreams of success. But unless you do the right groundwork before you launch, there’s a very great risk those dreams won’t come true.
Statistics show that as many as 44% of all businesses fail by their third year – 46% of them because of incompetence. And when you factor in the demands being a mum place on women, it’s no surprise that many ambitious mumpreneurs find it hard to get off the starting blocks.
Five reasons why your business may fail – and how to ensure it doesn’t
There is good news however. By understanding five important reasons why start-up businesses fail, you can make sure you take the right precautions to ensure that yours doesn’t – and look forward to turning your business or freelance dreams into a successful reality.
1) You don’t know how you’ll make money from your business
It’s all well and good following your passions and starting a business or freelance career, but if you’re not clear about exactly how you’ll make an income from it, it may never be more than an expensive hobby. Whether you’re creating products or selling your services, you need to understand your profit margins, and the real commercial value of what you’re doing – and be certain that a market exists for buying it.
And that market needs to extend beyond friends and family. People who care about you may enthuse about your talents and products, but will strangers buy them? And where will you find your customers? How much do you need to earn every month for your business to be viable – and how many sales must you make to cover it? Are these figures realistic? Have you genuinely researched demand and potential sales channels?
By doing your homework up front you can save yourself valuable time and costs marketing your products or services in the wrong place, to the wrong people, and failing to make sales. Only when you are completely clear about who wants or needs what you are offering, and where these people are looking, can you confidently launch a potentially successful business.
2) You don’t understand your customers
We’ve already touched on learning who your customers are, but in fact your knowledge needs to run much deeper than roughly identifying a potential niche. You need to be able to picture exactly who will buy from you.
In order to meet someone’s needs or wishes, you have to know more about them than whether they like what you’re doing. You also need to understand their problems and fears. Because when you can demonstrate that what you’re offering solves their problems or takes away their fears, they’ll be sold.
One good way to do this is to create an imaginary person who is your ideal customer. Give him or her a name, and decide what kind of house they live in. Do they have children? What’s their job? Imagine every aspect of their life and the challenges they face – and then work out how your products or services make their life easier or better for them.
When advertising agencies devise campaigns for their clients, they create detailed customer profiles just like this. This helps the marketing and creative teams understand exactly who they are talking to, so they can communicate the precise aspects of their clients’ products or services that will most appeal to the target audience. And if you want to make sure your marketing is on message – and your business succeeds – you’ll do the same too. The great news is that it’s easy, free and fun. And you may even learn new things about what you do that can steer you on a more successful business course.
3) You don’t have a clear goal
Why are you starting your business? Do you want to kill time when your children are at school? Want to use your skills to help others? Need to make money? In order to create a successful business it’s vital that you understand exactly what you want out of it. After all, if you don’t have a clear goal, how can you work towards it?
All too often, people stumble into businesses without much of an idea as to why they’re doing it. So think carefully about what you really want to achieve. To be regarded as an expert in your field? To earn just enough to cover your expenses, or to make enough to retire on within five years? To serve a small amount of loyal customers with high quality products and services, or reach a much larger amount of people with cheaper ones?
Every one of those goals will determine a different direction for your business and requires very different decisions and actions. So if you’re not really sure what your goal is, you won’t be able to make the right decisions and actions to achieve it – and risk running a business you don’t enjoy, or failing completely. There’s also a very good chance that, if you don’t know what success means to you, you won’t recognise or be able to properly enjoy it when it happens.
So before you do anything with your business idea, establish exactly why you’re doing it – and how you’ll know when it’s successful. And then go out and work effectively towards your goal.
4) You don’t have a strategy
Once you have a clear goal for your business, you can create a strategy – another ingredient in every successful start-up.
A strategy is a firm idea of how you need to get from where you are now to your goal. A good, well planned strategy will identify the steps you need to take, contacts you need to make and work you need to undertake to get there.
When you have a solid, well-defined strategy, you’ll find it much easier to make good business decisions. The truth is, when you start a business you’ll need to make LOTS of decisions – big and small. Decisions like what should your logo look like? Who should design it? What social media platform is best? Should you be a limited company or sole trader? Do you need an accountant?
If you have a firm strategy in place, you can compare your decisions with it and decide what route forward is most in line with your goals. Think of it as a trusted sense checker. If you’re not sure about spending money on something, check your strategy to see if it’s a wise investment, or potentially profits down the drain – and ensure that you make the right choices that will help your business succeed.
5) You don’t treat your business like a job
Starting a business is a big commitment, and unless you take it as seriously just like you would a ‘proper’ job with a demanding boss, you could well be doomed to failure.
As a busy mum, it’s easy to relegate your business down your list of priorities from time to time. But unless you allocate and devote clear and uninterrupted time for your business or freelance career, it doesn’t have a fair chance of success.
The reality is that your business will be up against competitors who have more time (and energy!) than you as a mum, so you need to ensure that you genuinely have enough opportunities to focus on making your work a success.
So before you invest any time or funds into launching your own business, identify realistically when you can work on it. And then make sure you stick to it. Think of yourself as your own boss, and don’t allow yourself to make excuses as to why you can’t really work on it right now.
This means ignoring housework when you’ve allocated business time, and turning down tempting invitations for coffee with friends. Of course there will always be times when life gets in the way – when your children are sick or during school holidays – but it’s important to give your business and yourself the best chance of success by really treating it as a genuine, valid enterprise. After all, if you don’t take your efforts seriously, why should anyone else?