8 Vital Tips to Avoid Business Failure
Starting a business requires a big dose of boldness. It can be a scary thing, but it can also be one of the most rewarding experiences of your life.
If you’re focused, organized and strategic about your actions, you’re well on your way to success. But, of course, business failure is all too common, so you need to be aware of the pitfalls to watch out for.
Whether you’re thinking of starting a business or you’re already on the entrepreneurial journey, in this blog post, I’ll share 8 vital tips to increase your customer base, revenue, and profits (and minimize the risk of business failure).
1. Carry out market research
Market research helps to validate an idea before execution. One of the biggest factors to consider is the viability of your proposed business.
Is there a market for the business? Are there other businesses meeting the same needs? If there are other businesses, do you have a unique approach to gain market share?
With market research, you’ll understand whether there’s a potential for your business or if you’re better off trying out something different. In fact, in some cases, market research can even help you identify better opportunities for yourself and your business.
Another big benefit of performing market research from the start is that it’ll help you understand your target audience better. Where they spend their time online, what topics interest them, what influencers they follow, what they have to say about potential competitors and a lot of other useful information that can help you market your business, build a better product, and avoid business failure.
2. Have a business plan
Creating a business plan before you start is essential, even if you don’t need to get a loan or only use it as a guide. A business plan will ultimately show you what kind of results you can expect, as well as help guide your activities so you can prioritize the most important tasks.
Added to that, it will convince potential investors that you know what you’re doing. As a beginner, you don’t have to start with a complex business plan. You can make a sketch and add more details as you acquire more information.
Some important details to have in your business plan are:
- Potential market
- Ideal customers
- Product information
- Business objectives
- Pricing model
- Potential revenue
- Strategy to reach buyers
3. Create a buyer persona
To build a successful business, you need to understand your potential buyers. This will give you the ability to gather more information about their needs, how to meet them, and how to convince them through marketing.
A buyer persona is a document that captures all the important details about your ideal customer(s).
Over time, you can refine your buyer personas or create new ones as your business begins to gain customers. Some important details to have in your buyer persona are:
- Pain points your service can eliminate
Having as many details as possible in your buyer persona will help you understand and send the right messages to your prospects. According to Single Grain, using personas can make your website 2 to 5 times more effective at targeting users.
See an example from the Content Marketing Institute that you can use to create yours:
Create as many personas as needed, depending on who forms your audience; based on their persona, they’ll likely respond better to different marketing tactics and strategies. Knowing exactly who you’re targeting will then help you come up with a personalized marketing strategy for each persona.
Use the information from the market research stage as that will be of huge help when putting together your target personas.
4. Have a system for project management and collaboration
Whether you have no employees or 100, you’ll most likely find yourself collaborating with various people. It might be outsourcers and VA’s, it could be employees and it could be suppliers and other businesses you work with.
This brings up the issue of setting up proper collaboration for your business. If you want to operate a successful business and scale, you need to get things running as smoothly as possible.
In fact, poor collaboration can be an issue for any business. A study found that 86% of executives and employees believe that a lack of collaboration is responsible for business failure.
That’s why you need a system to aid your project management and collaboration. Better still, you can use a tool like Monday.com which helps you to manage and assign important tasks to each employee. Easily, you can track the progress of your tasks and the effectiveness of each employee.
Using a single tool for all collaboration needs, like Monday.com, will help keep you very organized and this will ultimately save you a lot of time and headaches.
5. Provide great customer service
By providing great service at every opportunity, your customers feel valued, happy, and will continue to do business with you.
With the right customer service, you can differentiate your brand from your competitors in a positive way. It also provokes positive word of mouth which is more powerful than your marketing.
Moreso, Vision Critical’s survey revealed that 86% of buyers are willing to pay more for better customer experience.
An example of a business providing great customer service is Zappos. The company became a billion-dollar company by going the extra mile to ensure it satisfies its customers.
Zappos CEO Tony Hsieh said:
“We generally try to stay away from policies, we just ask our reps to do whatever they feel is the right thing to do for the customer and the company.”
Some channels to provide great customer service are:
- Social media
- Live chat or chatbots
You can use a social media listening tool like Mention to find mentions of your business online, even if you weren’t actually tagged. This way, whenever someone says something about your business or products/services, whether positive or negative, you can respond and take action immediately:
6. Gather information and engage in experiments
In order to run a successful, scalable business, you need to constantly look for ways to improve. This is done by carefully analyzing results, performing research and engaging in experiments (such as trying out different design elements on a landing page to increase conversions or even making changes to your product after hearing enough feedback from customers).
As you start to gather information about your business, customer behavior, and current trends, you should experiment to see how you can improve your business. Experiments or testing will help you find what works with your potential buyers and which part of your service you need to strip.
In The Lean Startup, a very popular business book written by Eric Ries, the author explains how businesses should follow the build-measure-learn cycle to ensure they’re satisfying their customers and improving results.
7. Invest in the right tools
Many of the tasks you have to go through as a business owner (or an employee of your business) can be automated – or at the very least, made easier/less time-consuming – by leveraging tools.
While they are an extra cost for your business every month, a good tool can actually yield a positive ROI (return-on-investment) as it will ultimately help you save time and improve results.
For example, social media marketing would eat up hours of your time every day if you were to do it all manually. But, if you got an all-in-one tool like Agorapulse, you’ll be able to manage all of your social media accounts from one place, across different channels, as well as monitor mentions, schedule updates and collaborate with team members. This way, you go from spending a couple of hours every day on social media, to only needing about 15 minutes to go through everything.
So while it might be an extra investment to pay for a tool every month, it will still mean a positive ROI if you save enough time to focus on other tasks – like creating new marketing strategies or improving your content.
Some areas to consider using tools for your business are:
- Social media management
- Email marketing
- Project management
- Customer relationship management
- Website analytics
8. Carry out competitive analysis
When you study your competitors, you can learn a lot of valuable information:
- Which platforms yield the best results in terms of marketing
- What their strengths/weaknesses are
- Where they’re advertising their products/services
- Whether they have disgruntled customers
- Where they’re getting their traffic from
Some aspects of your competitor’s business to analyze are:
- Marketing strategy
- SEO strategy
- Customer service
- Product specifications
With a thorough analysis, you can gather valuable information about your competitors and use it to gain an edge.
Starting a business is not a perfect science; that said, there are certain things you can do to ensure that you’re starting off on the right foot and minimizing the risk of business failure.
Whether you’re just thinking of starting a business or you’ve started running one, take these tips down as a checklist and put them into action to improve your results.