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Five Problems to Watch for When Starting a Business

With the economy currently in a state of decline and unemployment on the rise, the business world is filled with young entrepreneurs creating their own jobs by creating their own businesses. As the number of start-ups in each industry increases, however, the competition in those industries becomes even fiercer.

No one wants their new business to fail- every new business owner believes that it is their will to succeed and their drive to work that will keep the doors open. In reality, scores of new businesses across the country close their doors after only months of operation. No matter how strong your desire to succeed, success is only possible if you have all of the necessary tools to keep your business running.

This article will point out five problem areas typical of new businesses, and how to make sure that your business does not fall prey to these issues.

1: Lack of Business Knowledge or Management Skills

Ultimately, a business’ greatest strength or weakness is the owner’s ability to make canny decisions and appropriate judgement calls. Gut instincts are good, but nothing replaces a working knowledge of the different aspects of a business, and how each aspect should be managed and organized. If you don’t understand your business inside and out, you won’t be able to run your business for maximum efficiency, and that will endanger your profit margins.

2: Setting Overly-Ambitious Goals

People who are new to running their own business often over-estimate their initial profits, sales, and market penetration. It’s easy to say “Only 10% of my market would need to buy my product in order for me to become a millionaire!” because the percentage sounds so small- but only a thorough and accurate feasibility study can tell you what you can expect in terms of sales and market penetration in any given period of time. Market data is key, especially in the early days of a start-up, without previous numbers to use in projecting future earnings.

3: A Poor (or Non-Existent) Business Plan

Though it sounds hard to believe, many people start a new business without first creating a business plan! That’s like beginning construction of a house without a blueprint. The business plan provides a solid guide for many years to come, reminding you of your business’ goals, plans, and structure. A good business plan doesn’t just cover the nature and size of your endeavour- it includes goals for the future and the objectives for success.

4: Lack of Support

No matter how “small” your small business is, you can’t do it all on your own. A healthy business needs support of all kinds: financial reserves, equipment backup and repair, and people to help should business get overwhelming or you fall ill. Not all of these types of support are created equal: capital is the most important type of support your business can have. Capital can help you afford the other resources you don’t have, and also give you the ability to purchase prototyping, research, and equipment. That doesn’t mean you have to be rich already to be an entrepreneur: raising capital through investors can be difficult, but it’s never impossible for the go-getter with a great idea and an airtight business plan.

5: Lack of Ambition and Drive

Many people who dream of owning their own business dream of setting their own hours and enjoying the good life once success is theirs. That dream can be a reality, but only after an incredible amount of hard-work and determination. Owning a business is easy: running a successful business is hard. Look deep inside yourself and see if you really have the determination and the faith in yourself to keep going, no matter how hard it gets or how many obstacles stand in your way. Knowing yourself, your strengths and shortcomings, and what it is you truly want will take you a long way in business as well as in life.

Despite the difficulties in the economy, now is a great time to be a young entrepreneur. There is always room in the marketplace for another brilliant idea, sharp mind, and useful product. By avoiding these five problems, you can be sure you’re giving your business, your investors, and yourself every opportunity for success.

5 Easy Steps to Use the Power of Online Business Directories

Online business directories are fast becoming the information hub of local customers searching for local businesses. Local customers are resigning their old, brittle print directories to the storage bin and turning to their computer and Smartphone to locate the best local business in town that caters to their needs.

A survey in the United Kingdom shows that approximately 20 million local customers each month is turning to online business directories to search for local products, services, or businesses. The behavior of local consumers is changing. Clearly print directories are no longer working for local consumers; they’re switching to an online business directory for faster, better, and detailed search result. The limited information on a yellow page is fast becoming obsolete against the more detailed local search engine marketing tools like local business directories. These directories can list not just the description of your business but also your business’ opening hours, price listings, location map, and even your photo or your office or store photo.

Online business directories, including the hundreds of free business directories, permit for these extra details to be added to your business directory listing. It’s the local businesses who make the most of this chance that are inviting new customers.

There are literally hundreds of paid-for and free online business directories out there. But how do you know which ones are the best and what’s the key to perfecting your listing so you stand out from your rival businesses without having to dish some amount of money?

5 Quick Steps to perfecting your online business directory listing

1. Pick the most popular and relevant directories for your business

The best online directories are those that have the most number of online visitors or those that are industry-specific. But a word of caution-not all niche or free directory listing fit the bill; some have few to nonexistent user base. A quick search on Google will tell you which ones are worth your time and ones to ditch entirely. Search on Google your “business type” plus “your location”: e.g., “accountant in Leeds”. Those local business directories that appear on the first 3 search results pages are the ones to focus. (Check the online business directory comparison chart to see which directories have the most number of audiences: comparison of top UK online business directories.)

2. Add your business to all directories

From the list you got on step one, add or claim your business to all of them. Many local business directories buy their listing data from a provider, so don’t be surprised if you find your business already listed on some of them. For future success, it’s very important to list the correct name of your business, address, and phone number-review your business’ existing list if the information is accurate.

Note: check for a confirmation email from each directory in your inbox; follow the steps on the confirmation email to complete your registration.

3. List as much information on your local business directory listing as allowed

The beauty of online business directory listings is that you can list not just the name, address, and phone number of your business, you can enrich your listing with more details like business description, clickable website URL, facilities, list of services, logos, opening hours, pictures, etc. Use this opportunity fully to personalize your listing to make it more relatable to your customers. Review the information you entered to make sure it’s 100% correct and true to each local directories.

4. Make or use a local Special Offer Voucher

Nothing can be faster to convert browsers into actual buyers than offering vouchers or coupons on your local business directory listing. Local consumers are paying attention to the word “free” or “special offer”; your business listing will stand out against your rivals if you have these words added. You don’t have to offer heaven and earth to your customers; any form of offer is good enough to get customers to walk into the door than nothing at all.

Tip: use different voucher codes on each directory so that you can monitor which directories are giving you the most number of walk in visits.

5. Interact with the communities on these directories

Online directories are dynamic websites with vibrant, active community of users. These users or local customers are actively rating and reviewing the listed local businesses they use, and these ratings and reviews are visible to other directory users. In fact, 70% of consumers trust online business reviews-business directories know this so that they’re pushing up local businesses with positive reviews higher on search results. This is yet another small business marketing strategy you can use. Do either of these to rank your business listing:

  1. Ask your existing, loyal customers to go online and leave a positive review about your business;
  2. Participate with communities on directories and encourage them to visit and test your business or organize an ‘event’ at your office, shop, or store just for them.

Never try to ‘bribe’ people to review your business, though, as this can backfire on you and can generate lots of negative comments which you don’t want (obviously!).

Online business directories offer a great opportunity for all types of local businesses to win new customers. The process of updating and managing your business listings across multiple online directories is very time consuming. In business, time is money and you can save both using a multi-directory listing service such as DirectoryRunner from BrightLocal.com. DirectoryRunner allows you to manage and update all your online directory listings and local search engine marketing tools in 1-place.

How To Remain In Business Despite Intense Competition

What do you do when competitors emerge in your business? Don’t panic, FOCUS!

Whether you like it or not, the world of business is a very highly competitive one. Business is a game and it takes a lot to eventually emerge as a winner. Winning however does require you find a way to remain in business irrespective of competition. Perhaps one of the most critical factor in determining who wins or lose in the game of business is knowing what not to do in the face of intense competition. It’s costing me a year without regular pay from one of the businesses I’m involved with as a partner to learn this lesson. So, permit me to share my story.

In March 2008 my friend and I took over the management of a defunct cybercafé. We had consulted for this cybercafé earlier in 2007, doing a total business process re-engineering including the hiring and training of new staff. That year everything seemed to work fine in the hands of the owner with us coming around from time to time to check up on things. As it turned out after almost a year, things started going sour because the owner wasn’t directly involved in the creation of the change we had handed over to them to now manage. As a result, the business towards the end of the year folded up, this time for the second time since they began operation.

This was when we got an offer from the owner to come in no longer as consultants but now as partners to resume complete management and turnaround of the business. How glad were we when this opportunity came. It was an opportunity for us to experiment all our ideas on how to build a SIGNIFICANT business. And a significant business we did build. At least several evidences showed. For example, in the first year of our operations the business recorded the highest sales so far since it came into existence, a whopping sum of 3.9million naira! Also, we successfully initiated a first of its kind membership program for a cyber café whereby browsers logged in with a personalized username and password of their choice. As a result, we have the highest customer retention rate in the whole industry with close to 1700 registered customers since March 2008 when we took over. We had the largest market share as far as the immediate community where we operate from is concerned. Our goal was very simple; redefine browsing from an activity (what people do) to an event/experience (what people enjoyed). We didn’t only succeed, we became an object of envy and just as its common with any enviable performance, then came along the wannabe’s -the so called copycats (competitors.)

Like a planned hostile takeover, in January 2010 a total of 9 new cybercafés sprang into existence (compared to only one at the time we took over the business) with two occupying the same business premises as we. We were about to be eaten up alive by all the new guys and so we panicked. Why? Because they didn’t just stop at copying all that we did, as is synonymous with competitors, they took the game a step further. They came with their flat screen (LCD) monitors, smaller number of systems in an air conditioned environment: talk about a total knock out! (TKO). There we were with our cathode ray tube (CRT) monitors, with more systems in a no air conditioned environment. I mean they had copied everything from our pricing model to the software we used as a timer. The only thing they couldn’t copy was our membership strategy. I guess it was more complicated and will demand more work from them. And that, my dear reader was and is still our saving grace. We never realized this until after we had panicked and reacted out of desperation in an attempt to remain competitive. What was our reaction?

We went head on and bought our own air conditions. I mean we bought four air conditions all at once in the month of January alone. Paid PHCN (the electricity company) to install a new business line to ensure a regular power supply since our big generator couldn’t power our four new air conditions. Mean while in our competitor’s case their small generator could carry their own air condition because they didn’t have as much computers as we did and they had only one air condition. We based the whole of our winning-strategy on stable power supply believing that we would match up with them on air conditions even though we didn’t get flat screen monitors. Instead of flat screen monitors, we decided to expand by taking up one more office suite in addition to the three we were previously occupying to make room for the growing demands from laptop owners.

In essence, we spent more than they probably did but still lost a part of the total market share. Why? Because we panicked and reacted out of desperation rather than being proactive. We ended up spending more but for the wrong things. We didn’t think through on our decision to buy those air conditions. Our singular strategy of constant power supply went up in smoke exactly two weeks after installation and the AC’s we bought were as good as useless since we didn’t have the regular power supply to operate them. So we were back to square one, only this time with more debts since we had to borrow some money from a bank to fund most of these reactive moves.

How can you remain in business despite intense competition?

How you respond to the competitions is the key determinant whether you’ll remain in business or not!

The entrance of new competitions into an existing market can be a blessing or a curse depending on how you respond to it. In the previous post, I shared a story of how the entrance of new competitions nearly drove us out of business because we didn’t choose our response carefully, we panicked and lost focus. This seemingly minor mistake in tactical planning is still costing us so much headache in the business even though we have began to take corrective measures. Choosing your response carefully after having strategically considered every alternative is the focus of this concluding part of the article.

Don’t Panic, Focus!

Competitions are very useful to businesses because they act as a source of feedback. Alone you might not be able to measure your strength or weaknesses objectively, but the emergence of competitions will help put your business in a better perspective. Take it or leave it, the entrance of new competitions will either make you or break you; these are the only two options available to you. Panicking will break you as it almost did to us but focusing will make you as we later found out. Like I said above, the entrance of new competitions is like a raging storm that sweeps everyone along its path off their feet if they aren’t standing firm or holding on to something strong and tangible.

As with every raging storm, no matter how turbulent it seems at first, there comes a period of perfect peace. This period can only be enjoyed by those who lived to see it and that would be those who held on firmly to what they believe in irrespective of external pressures. So don’t panic no matter how many your competitions are; don’t do anything in haste out of fear. Rather, calm down to study the dynamics of the new competitions and let your response be born out of understanding and not fear. Until you understand their game plan, don’t respond yet; focus on your business by leveraging on your areas of strength and seeking out better alternatives to manage your weaknesses.

So what was fundamentally wrong with our response to the competitions?

In our own case, we responded wrongly because we reacted early. How you respond to competitions is what really matters and not the entrance of new competitions. You see when competitions show up in your line of business it’s more like a raging storm that can sweep you off your feet if you are not standing firm. It is not the time for you to panic and start making frantic moves born out of fear rather than strategic planning. We realized this mistake only after the power company we had backed on for regular power supply to power our air conditions messed up. It’s funny thinking of it now in retrospect; how could we have been so lame to have imagined a regular power supply in a country like mine (Nigeria) where irregular power supply was the norm? In my country, the only way to ensure a regular power supply is to own a generator -an expensive, high cost of maintenance and fuel consuming machine that generates power and pollutes the environment. In our first year of business we spent over 1 million naira (almost $7000) on generator expenses alone. Imagine if such an amount of money had been ploughed back into the business.

Please don’t get me wrong here; I’m not at any point suggesting that the possibility of a steady power supply in Nigeria is unattainable. My point really is this; for now such a possibility is still far from reality. It’s the consciousness of this fact that made us to go as far as paying the power company extra for a dedicated commercial line which they claimed would be more regular than the residential line. If we had been more patient and not in our panic mode, we wouldn’t have spent so much on a dedicated but irregular power supply nor would we have gone ahead to buy and install four new air conditions. All of this money would have been diverted into some other strategic areas in the business such as getting a bigger and better generator that would have been able to power the air conditions when we are eventually ready to buy them.

Well, it’s no use crying over spilled milk. The good thing about the whole experience was the vital business lesson it taught me without which you wouldn’t be reading this today. The lesson learnt is costing me and my partner a whole year without pay. Not to even mention all other non financial cost such as stress, threat from creditors, loss of sleep etc. So for the singular fact that I’m saving you several months of headache not to even mention financial loss, I think it was worth it! The least you could do in appreciation for this free but expensive business lesson is to share this article with every Entrepreneur you know.