5 Mistakes Local Business Startups Make
See why many local businesses fail before they really get going because they are making one or more of the mistakes listed below:
1. Under Capitalization
It sometimes takes 2 to 3 years for a new business to breakeven. Until the business reaches the breakeven point, the owner will have to come out of pocket for living expenses and to pay the bills to keep the doors open so new customers can be accepted.
If businesses started with enough working capital, the owner can keep the business operational until it is profitable or they sell it to a competitor that wants something unique that they have brought to the marketplace.
2. No Business Plan
A business plan is a framework that is used to outline where you want to take your business and it is often set up with long-term, midrange and short-term goals. In addition to the goals, this plan outlines how you intend to measure your progress or lack of progress towards each of these goals.
3. No Marketing Plan
A good marketing plan will outline the different ways you intend to market your business. This plan will often include both free and paid advertising methods in addition to trade shows and other means of gaining exposure.
If you have no written plan, how do you know what activities need to be performed by you or someone you hire on a regular basis to get the word out about your business?
How are you going to measure the success or failure of your marketing efforts if you don’t have a plan or use marketing strategies that allow you to clearly determine the ROI on each method used?
4. No Marketing Budget
Every business needs some kind of marketing budget. If you’re starting a new business and don’t include money for marketing, you’re setting yourself up to fail. Word-of-mouth advertising is great but it takes a long time to build up enough traffic through this marketing method to make you profitable.
Social media is another marketing method that many new business owners plan the use because it’s free to create a business page as a base of operations.
Unfortunately, these business owners fail to realize that their time and the time of any employee that they have doing their Facebook marketing has value which can be measured in dollars and cents.
Additionally, most people go to Facebook and other social media sites for entertainment instead of looking for something to buy.
Social media sites are valuable tools that should be part of an overall marketing strategy but the strategy that’s used by many businesses is going to be different than you would use for your personal profile.
One of the most powerful uses of social media sites for a business is to market their excellent online reputation.
Unfortunately, many new business owners don’t understand the importance and power of building online reputation and then using that reputation.
If done correctly, reputation monitoring, reputation management and reputation marketing should be done with a team that specializes in doing online and reputation marketing.
Consultants that specialize in online and reputation marketing are usually worth their weight in gold when you work with them because as your online reputation grows so will your business. (As much as 80% of new business can come directly from online reviews left on Google and other local directories by happy customers.)
5. Failure To Know The Rules That Govern Their Business
Every local business has a certain set of rules that they must comply with to conduct business in their community.
The rules that govern your business will vary depending upon your niche but you need to know which local, state and federal rules exist that you must comply with to remain legal.
Rules that apply to some niches are:
- a state required professional license
- a business license for the county
- a special disclaimer might be needed to legally protect you
- a policy that addresses the use of customer testimonials
- a refund policy
- a policy that tells how you handle information you collect from your customers
Some of the above apply only to your online presence but others are needed both online and off-line.
Your business deserves the best start that it can get when you first start it.
To give it the best possible chance of surviving and thriving, you need to have the above in addition to a mobile friendly website that will allow potential customers to learn more about your business and the products or services that you offer.
It takes time, effort and money to build a five-star online reputation but the payoff in future business is well worth the investment.
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