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Jul, 01 2008

Mistakes to avoid

Many people assume that owning a business would mean less of work. Unfortunately the opposite is true. Here are some blunders you may make.

Many people assume that owning a business would mean less of work. Unfortunately the opposite is true. Here are some blunders you may make.

Blunder # 1: Inadequate financing

A number of people often lack the necessary start-up funds and cannot come up with adequate financing. A franchisor does not provide direct financing. In most instances, neither a bank nor any financial institution will provide someone with financing unless that person is investing a significant portion of his own funds, boasts a good credit record and has the means to pay back the loan. When prospects do qualify financially, financial institutions usually finance 50 to 60 per cent of the total investment.

Blunder#2: Lack of planning

A majority of new businesses fail within a few years mainly due to poor planning or no planning at all. They do not do a market study first to see whether the demand for their product or service is growing, declining or stagnating. Most new business owners assume the majority of their time would be spent producing and marketing their product or service. Unfortunately, this is not the case. An inordinate amount of time is spent on administration - talking on the phone, purchasing supplies and equipment, filling out government forms, and taking care of other mundane duties.

Blunder#3: Unrealistic expectations

Many assume that not only do most businesses succeed, but they are lucrative from the word go. It usually takes at least a year to develop a profitable business, and even then, the money has to be reinvested in the business. Therefore, in your first year, you should have other sources of income to live on.

Blunder#4: Inability to commit

Even though most people would like to start their own business, only a small percentage actually does. When push comes to shove, most lack the self-confidence to make a decision and act on it. For their businesses to succeed, they must be able to gather information, weigh the facts and then make a prompt decision.

Blunder#5: Unwillingness to take responsibility

A business owner is 100 per cent responsible for his mistakes. There`s always a risk of a business failure or less-than-expected financial return. If that should happen to you, you cannot blame it on someone else.

Some additional tips Besides the above, you should also look into the following:

  • Some prospective franchisees may get excited about owning a franchise and overlook certain details which could later lead to unexpected responsibilities.
  • The first year should be spent on business-getting activities, such as making sales cells, telemarketing, attending trade shows and networking. Office operations can be managed by a skilled staff member with only modest involvement of the owner. It is only the owner who will have the necessary drive and motivation to develop the business.
  • When business does not come in right away it can be frustrating. Those who lose patience only add to their difficulties. Instead, they should become proactive sales people and work to create more new business relationships.

Getting ready

Those who can overcome these obstacles are ideal candidates for business ownership. Many of these qualified people do not make the attempt, however, because they are (understandably) unwilling to give up the security and benefits of their full-time jobs.

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