Skip the market researchBusiness owners need to know the who, where and why of their business before they can sell anything. But not all business owners take the time to find out if they even have a market before jumping in, and failing to research your market can be disastrous for new companies.
Wendy Vinson, president of E-Myth Worldwide, recalls one client who, being a musician, wanted to open a music store, selling instruments and teaching lessons in the back. He investigated a couple of different towns and found out how many people went to music schools and where they really got their supplies.
"This guy was great," Vinson says.
He researched where he would find the most people interested in music, instruments and lessons.
"He did a competitive analysis between the cities, and the one with the most opportunity was the one he chose," Vinson says. "I can tell you that the majority of start-ups do not do that."
In many instances, would-be business owners make decisions based on their lifestyle, such as opening on a corner near their children's school or close to home.
"We would say, do market research, validate that your business is needed and model your service to what is needed," Vinson says.
"Understand the competitors and how you can make (your business) stand out. What is different about yours -- how you wrap your product, pricing. Some people will just throw things out randomly -- even how they name their business," she says.
Limit your understanding of the businessCheck your elevator pitch. As a small-business owner, if you can't sum up your business in about two minutes, stating concisely what you do and why your business exists, you might have problems.
"You need to be able to articulate very clearly, and in what I call a very compelling manner, what you offer, why it is of benefit and why it is different from what is out there. If you can do that, you probably understand what you are doing," says Fred Glave, a Washington, D.C.-based counselor with SCORE, a free consulting service to small-business owners and entrepreneurs.