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Common Mistakes of Young Entrepreneurs
Enter a market without a distribution partner
It is easier to penetrate a market if there is already a network of agents, brokers, factory representatives and other resellers are ready and available to sell your product in the existing distribution channels. Fashion, food, media and other major industries work this way, others are not so lucky.
That is why service businesses such as public relations firms, yoga studios and pet care companies often struggle to survive, alternating between feasts and famine.
The solution: make a list of potential referral sources before starting your business and ask if they would refer clients.
Customers pay extra for
Spend much money on advertising can attract customers, but it is a strategy that will lose money if the company can not turn them loyal followers.
“A company or website that spends $ 500 on advertising to acquire a customer who paid U.S. $ 20 per month and cancel the subscription at the end of the year is just throwing your money,” says the article.
The solution: test, measure, and then try again. Once you’ve done enough tests to determine how to make more money selling products and services to its customers than it spends to acquire, launch an advertising campaign.
Very little capital raising
Many new companies assume that all they need is enough money to rent space, buy equipment, inventory and fill to get customers through the door.
What we usually forget is that they also need capital to pay for salaries, utilities, insurance and other expenses until the business begins to generate profits.
Unless you drive the type of business where everyone works for the love of art and varies his compensation, need to get enough money to keep it afloat until it achieved revenues cover their costs and generate sufficient positive cash flow.
The solution: Calculate the cost of the new company before it opens its doors, not after.