We live in a competitive world. The market is always changing. Therefore, successful entrepreneurs are always anticipating, adjusting, and re-inventing. Opportunity for new businesses entering this market has never been easy. This tempts entrepreneurs to use some shortcuts that later bring problems in the business. No matter how easy shortcuts may be, as an entrepreneur, you should always avoid them at all costs.
Here are some startup shortcuts that will damage your business-
This Opportunity Does Not Need a Business Plan!
There is a saying that goes – No modern home is built without an architectural drawing. Even a mobile phone is designed using very specialized engineering models and art. Retail stores are meticulously composed and arranged. But then, business visionaries, very frequently, either won’t perceive or won’t focus on writing a customized business plan. However, using an internet template is a waste of time. There are hundreds of Business Plan submissions received annually. Investors are usually waiting for a comprehensive and exciting business plan that would be outstanding to get funding, licenses or sales other than using an internet download template. This way, it shows shortcuts and lack of serious commitment.
Let’s Guess the Cost of Goods
It is good to know the total cost of goods (COG). If the COG is too high, a product is not likely to compete. A low COG, with irresistible product quality, is important for success. Every part of a product or service should be incorporated in a supporting Bill of Materials with costs added to fractions of pennies. These are the totaled cost of goods, then add costs of transport, customs and duties (if offshore production included) to get a dead net COG.
Thinking that the COG is accurate is a dead giveaway that most entrepreneurs have taken deal-killing shortcuts.
Fictional Sales Model
Entrepreneurs are passionate about their creations, and passion is crucial. However, they usually don’t do enough research about the competition, size of the target market, and create a sales model that is not attainable and realistic. What really is a sales model? A sales model is a quantified, qualified, and a well-researched formula to know the realistic sales potential for a business opportunity. Knowing the dead net cost of products is very important in establishing a reliable sales model. What is the demographic for the product? How does the new product vary in features and advantages from competitors? What is the competitive overview?
In the next one year or two, how many store openings are likely to be acquired? What is the expected annual income per door? Are there going to be international sales, starting from when? A fictional sales model is a shortcut that could damage your business.
Amateur Prototype or Design
Professional quality, shelf ready prototypes is a basic element when seeking to stock, sell or permit a product opportunity. The 3-dimension CAD art is very important in patent submissions and coming up with the cost of manufacturing the product. Sometimes the inventor has the skills and equipment required to effectively create this very important design element. However, most of the time we see entrepreneurs trying to avoid the cost, time and research needed to properly make the features and uses of their product or service. This is an opportunity killer that they miss out.
These are just but a few of the most common shortcuts that entrepreneurs often take. Unfortunately, these shortcuts if taken they will damage good start-up opportunities.