More than 80% of U.S. start-ups fail within their first year, with financial inadequacies frequently leading to their downfall. So with entrepreneurship booming in the U.S., how can young people give their businesses the best chance of success?
Eager to advise budding entrepreneurs, the experts at Wix.com have compiled their best advice for starting a new digital business as a young person, including the common pitfalls, as well as how to stress-test your business plan.
Common Pitfalls
Setting up your own business as a young entrepreneur is never easy. However, following these tips to avoid missteps and pitfalls may help ensure that you don’t fall at the first hurdle.
Three common business pitfalls:
Lack of online visibility: If your start-up business lacks online visibility, then this can negatively impact brand awareness, and, ultimately, revenue. Young entrepreneurs should aim to concentrate efforts into ensuring your website ranks high enough on mobile and browsers by implementing strong SEO techniques such as using trending keyword search tools, and optimizing website content to help you to do so.
Avoiding personal networking to grow brand awareness: Utilizing personal networks is particularly important for new businesses. Using social media advertising through friends and family is an easy way to help grow awareness of your company and its product. The more people using your product and leaving reviews, the more interest you’ll receive from future customers. Many young budding entrepreneurs forget how useful their personal network is.
Poor product pricing: It can be hard to find the right balance between pricing a product low enough to attract consumers, yet high enough to cover labor costs and return a profit. You should consider the purchasing power of your consumers so you can enable your business to generate enough revenue.
Top Tips
Many start-ups opt for penetration pricing, which involves offering low prices that initially undercut competitors to win consumers, then gradually increasing prices as your market share grows. However, this does entail some risk as it could result in a financial loss while you’re building brand awareness within the market. Be sure to conduct thorough research into your market niche to analyze pricing and consumer purchasing power.
Top tips for starting a new business:
Identify and know your passion: There are numerous benefits to starting your business around your passion. Not only will you be able to bring your own expertise, but you’ll also be more motivated to make the business a success, striving to get the most out of your business and giving it the best chance of competing within the market.
Plan, plan, plan: Planning all aspects of your start-up business is vital as a young entrepreneur. You’ll need to create a solid business plan that summarizes your business, industry, and consumer analysis, as well as an operational plan and financial estimates and projections. Competitor analysis is also an integral part of planning, which can aid you in growing your own marketing and sales strategies, to expand your brand awareness and push your unique selling proposition (USP).
The importance of finances: Financial limitations HYPERLINK “https://flair.hr/en/blog/startup-statistics/” \t “https://mail.google.com/mail/u/1/” \l “label/Supplier+Diversity%2FSmall+Business%2FEntrepreneurs/_blank” frequently lead to the downfall of start-ups, which is why it’s vital to have your finances in order. Many young entrepreneurs have to fund their business themselves so having your personal finances in order is crucial. If you need to get a business loan, then having a good credit rating can help you to acquire the funds to set up your business. However, once this is acquired, ensure you keep your business finances healthy and implement adequate pricing, to cover costs to avoid losses, and to also keep customers happy.
Stress-Testing
Stress-testing is vital for ensuring your business can withstand economic disruptions, as well as for understanding the health of your business model and for identifying gaps in your plan that may threaten the longevity of your business.
How to stress-test your business plan:
Identify risks your business may face: These may be risks in strategy, such as market focus, financial risks, how the business finances will be managed, operational risks on how the company operates, or compliance risks that could be picked up on by government regulators.
Create a risk management strategy: Generating a strategy to prepare for those risks identified is key. Look to create methods and plans of how your business will manage the risks identified if they were to arise. As a young entrepreneur, it’s also valuable to talk to experts within your field who can give key advice and knowledge on business strategies, as well as money and time management to help you avoid downfalls in your plan.
Utilize this to review your plan and update it: Once you have identified risks and a risk management strategy, you can utilize what you know to ensure your business plan is up to date and has the best chance of success and longevity. It’s important to remember you’ll need to occasionally review your stress test and strategies to ensure they’re updated in line with any new risks or changes to the financial climate.
In Conclusion
By combining meticulous planning, financial awareness, stress-testing, and a well-made website, your business can be given the best chances of making it past the initial set-up stages.
Source: wix.com/blog/how-to-start-an-online-store