#fuckupalert – how to avoid a business fail?
Spectacular slip-ups happened to the author of the computer giant Bill Gates, for the boss of the biggest online shop Jeff Bezos and the most eccentric investor in the world – Richard Branson. It is obvious that blunders are awaiting also for small entrepreneurs, although it is easy to avoid many of them.
One could think that the richest people in the world have always known what works in the business and were never wrong. Nothing more incorrect. Billionaires, entrepreneurs, investors often take bad decisions. And they… openly admit to that. Some even claim that the road to success was paved with many mistakes.
Spectacular fails of the biggest
Examples? The owner of Amazon Jeff Bezos admitted some years ago that his avocation for experiments didn’t lead to the enormous problems but it was close to it. During one of his performances he said that slowly looking into the story of his fails would be like a root canal treatment. Painful and long. Meanwhile in the final year he became the richest person in the world, his wealth achieved the value over 100 billion of dollars.
Have you ever heard of Traf-O-Data company? Probably not. And it is exactly a first company of Bill Gates, the author of Microsoft and for many years the richest man in the world. Traf-O-Data created devices which read road tapes out on which were information about the move. Does it sound curiously? Indeed. The trouble is that nobody wanted to use the equipment.
Richard Branson, founder of huge Virgin Group, was exceptionally sincere while telling about his mistakes. “Experiencing failures is a part of the DNA of everyone pretended for being an entrepreneur and I am not an exception” – he wrote on his blog. What was a frequent Branson’s mistake? Love of own ideas. He hit the idea of the Virgin Cola – competitor for the Coca-Cola. In the crowning moment his product had 0.5 percent participation on the market. For months and months the project slowly died and ate the cash by the sackful up. Branson later admitted that ideas must have something more than only alone daydream about new releases.
What are these stories demonstrating? Mistakes are unavoidable. Of course the small entrepreneur meets completely different business challenges than large firms in the world. But a common denominator has a lot of problems.
Lack of knowledge
It is both about legal conditions of enterprise functioning, tax regulations, but also the knowledge about the market and the competition. These first gaps will start resulting at inspections of clerks. Second become apparent when the key prospects aren’t interested in the product. At the beginning Gates made just such a mistake. His offer passed the needs of customers. So he dispensed with the analytical equipment for controllers of the traffic in cities and turned in the direction of providing software for the personal equipment – establishing the Microsoft. And he won.
Uncritical faith in customers
In contrary it doesn’t help in the business. However it is facilitating activity for dishonest entrepreneurs. The consequence is payment gridlocks, i.e. overdue payments which are touching the every second company upon in Poland. It is also one of main causes of closing activity in Poland last years. You don’t have to feel the utter confidence for every business partner.
The considerable part of entrepreneurs isn’t aware that on the market there are tools for verification of the payment culture when it comes to contracting parties available. They are both cheap and fast.
It is possible to save the illiquidity with company credit. Unfortunately it is expensive solution which can get every company into trouble – particularly the young one. Remember that a verification of contracting parties is a natural matter for enterprises from the West. The business in Poland is still learning the principle: I trust, but I check. If your contracting party resigns from the business with you because you are checking whether he is paying on time, most noticeably has something to hide. Reliable payers are boasting about timely payments and having no problems with showing evidence for it.
Neverending cost-cutting measures
It is another problem of young companies. Frugalities are good, but should not concern all elements of the businnes conduct. Some young entrepreneurs are curtailing expenses for advertisement and marketing. Specialists are saying that it is a mistake – however proper optimizing advertising strategies and choice about appropriate manners of reaching are crucial. Contrary to appearances, community scope of the company on Facebook decides too little to become known in the awareness of customers and to earn something. Apart from that a suitable exhibition of the company page in search engines is essential. In some industries still catalogues and reviews of enterprises are in a strong position – it is worthwhile learning how to hit there with your offer.
From the other side it isn’t possible to verge on irrational costs. The leasing of the luxury car can wait momentarily, when the company already becomes established and really starts earning. It is worthwhile to think what is essential for the business and what can wait.
Underestimation of rivals
It is a frequent mistake of entrepreneurs. Firstly – they go up to the market seized by other enterprises, secondly – hope that they are able at once to drive them from it. In order to hammer the competition it is necessary to suggest something new and better. If the entrepreneur wants to copy existing solutions, quickly can convince customers that he won’t arouse the interest. Why? Because why change one supplier on second, since is there no difference? It is worthwhile thinking before the start-up, why customers would be supposed to come exactly to you. Are there no such arguments? It is warning that it is worthwhile thinking the business model over.
No plan and no strategy
Creating the business plan, determining the strategy and preparing the comprehensive market analysis is an obligation for everyone starting the adventure with the company. Only few persons think, what they want to reach within a few nearest years – and after all the development should be planned and thought over. “If only to last” – it is a strategy directing the name in the direction of the fall.
You already know a bit. It will let you avoid #fuckupalert at the start!