Is there anything more empowering and liberating for a woman than going into business for herself? Of refusing to be confined by the limitations of her day job and making a decent living by doing something that she enjoys and is passionate about? In a free market, entrepreneurship is the ultimate way in which to express yourself. Many women around the world choose entrepreneurship as a way of thumbing their noses at the fundamental inequalities of the world of work. For example, did you know that we still have a gender pay gap which economists estimate could still take up to 200 years to close? Women still experience casual sexism in the workplace as well as inappropriate comments from colleagues which are shrugged aside because the person who made them is “old school” and he’ll be retiring in 6 months, so what’s the point of disciplining him?
The rise of digital technology has proven a Godsend for women who demand more from their working lives. Who demand a better class of business and are prepared to take on the responsibility of perpetuating it. The internet enables women to find business mentors and angels who can help them put together a business plan and find the required funding to get their idea off the ground. They can network with other like minded people and find the kind of employees who will being about the standard of operational excellence that will define their enterprises.
But no matter how well researched your business plan, how perfectly balanced your cash flow projections or how noble your intentions, the world of 21st century business can be a minefield. Here we’ll look at some problematic pitfalls that you’ll need to avoid for your business to be successful in this fast paced and extremely competitive landscape…
Borrowing too much
Even with the aid of the internet, finding the right finding for your business can be a challenge. Banks are notoriously slow to trust new entrepreneurs with business loans in the post-financial crisis economy and many a perfectly viable business plan has been met with slammed doors and rejected business plans. As such, when you find a lender who is prepared to give you the capital you need to get started, it’s easy to get over excited and borrow at the upper end of your limit.
However, this can actually get your business started on the back foot. You might be tempted to borrow more than you need to help you to prepare for a rainy day… But borrowing in excess can make that rainy day come much sooner. The more you borrow, the greater your monthly repayments will be and the more you’ll have to repay in interest.
One of your biggest challenges will be to take control of your cash flow, and when your monthly outgoings are increased exponentially by huge, high-interest loan repayments you’ll find cash flow much more difficult to manage.
When starting out, it’s hard to estimate how much your business will be able to bring in and excessive borrowing can see your business start life encumbered by debt. And once debts start to big your business down… It can be difficult for it to pull itself out again.
At the same time, entrepreneurs can go too far in the opposite direction. Cash conscious entrepreneurs can risk underinvesting in their businesses and their operations can suffer. Businesses that don’t invest properly in marketing themselves can find themselves losing business to their competitors even if they offer a superior product. Those that don’t invest in the right staffing can find themselves plagued by high employee turnover which inevitably means that the quality of service you offer your customers will suffer. Failing to invest in your website’s appearance and User Experience (UX) might make people slow to trust you online (and that can be a real barrier for e-commerce businesses). A lack of capital investment in tools and equipment may make it harder to scale up your business as it grows or operate in the most efficient way possible.
It can be hard to manage the balance between under and over investing in your business, which is why it’s important to calculate the potential Return on Investment (ROI) of every business spend and balance it against how much it can potentially make for your business.
Lack of trust and training in your workforce
New entrepreneurs spend a long time tracking down and recruiting the very best people. The people with the skills and attitude that will make their new business shine. However, after going to all that effort producing the right talent, you can create a barrier for yourself if you’re not prepared to give them the training and development they need to excel not just in their job roles but in their careers.
Employee training is not just something that you do in the onboarding process. It should be an ongoing process that helps your employees to meet the changing needs of your target audience. Ongoing training helps you to trust your employees and demonstrates that you’re committed to helping them achieve their career goals.
Neglect them and you’ll find it hard to leave the business in their hands. You’ll become a relentless micromanager and eventually burn out because you’re doing everything by yourself. What’s more, your employees will lose faith in you and potentially run into the open arms of your competitors. Which brings us to…
Taking your eyes off your competitors
It’s easy to feel intimidated by your competitors. Especially when they’re seasoned veterans and you’re a nascent entrepreneur struggling with a bad case of impostor syndrome. However, take your eye off the competition and you could lose customers to them.
Competitor analysis is essential in business. It shows you what other businesses are doing well and helps you identify ways in which you can be even better. It helps you to find gaps in the market or ways in which they’re failing to respond to consumer trends.
Doing business without watching your competitors is like stepping into a boxing ring blindfolded. You have no idea what your opponent is going to do and as such can’t respond effectively. It’s admirable to want to keep your attention on making sure your own work is as good as it can possibly be… But it’s a dangerous fallacy to act as though you’re doing business in a vacuum.
Assuming that market research is a “one and done”
Businesses get ahead of their competitors not by telling people what they want but listening to what they want. All would-be entrepreneurs carry out extensive market research when formulating their business plans. It’s how they know that their businesses economically viable and that there exists a gap in the market into which they can insert themselves.
However, it can be dangerous to abandon market research once you’re up and running!
Market research helps you to keep your finger on the pulse. It’s the means by which you know your target market’s wants and needs. It’s how you create a brand that resonates with the consumers who matter the most to you. As such, market research should inform every strategic decision you make from changing your logo to launching an advertising campaign. Neglect market research and you may find that consumers no longer feel that your brand resonates with them. And in an age where consumers are getting increasingly fickle… They will take their business elsewhere.
No matter what the size of your business, what you do, where you do it or whom you do it for, you will need to adhere to certain standards to ensure that your business operates in a safe and responsible way. Everything from the way you treat your employees to how you file your taxes to the wording in your advertising copy can be a potential compliance issue.
Compliance is a vast and complicated field so it’s important to ally yourself with vendors and service providers who will take the legwork out of ensuring compliance for you. Take a look at this post on how technology can help you be FCA compliant and you’ll gain an understanding of how your IT support can help you to maintain compliance. Nonetheless, it’s up to you to ensure that every aspect of your business meets its compliance obligations. Nobody is going to stand over you making sure that you do this, so it’s important to be proactive and understand your legal obligations.
When it comes to customer complaints, it’s oh-so tempting to bury your head in the sand. However, this kind of mentality can prevent you from capitalising on the opportunity inherent in every customer complaint. When someone says something less than flattering about you on social media, this can toxify your brand image if left unattended. However, take a proactive approach, address the issue and work with the customer towards a resolution and you’ll demonstrate to your following (and theirs) that you take complaints seriously. And hey, if they’re the kind of consumer who’s never satisfied or prepared to see reason, your following will see that too and your reputation will be preserved.
A formal complaints procedure is absolutely necessary to ensure that you use every complaint as valuable data which will help you to improve your operation.
Steer clear of these 7 pitfalls in your early days and you can build a strong foundation for a healthy and profitable business empire!