1. Failing to understand the purpose of the business
Many entrepreneurs fail to determine the core purpose of their business and pursue ideas they think will be good rather than finding out what customers actually want or need. Every business needs to define its purpose by asking hard questions. What’s the core proposition and why should customers be interested? What are you offering that people will pay for and what demand does it satisfy? Businesses need to set this thinking against a wider social purpose; why do we exist and what does the world lose if we don’t do this?
Asking these ‘what and why’ questions and doing your research will help define your purpose and, armed with that, create a much better chance of reaching your target market.
2. Not having a business plan
Creating a written business plan seems like a given, yet the vast majority of companies don’t have one. It’s vital to have this formal road map for your company, providing a defined, clear sense of purpose, direction and vision for the business. The plan should outline key objectives, targets and strategies for every aspect of the enterprise, including marketing, sales investment and growth. In this area we see huge contrast from no plan at all, through plans that live in people’s heads to a plan that runs to hundreds of pages, which may feel like more of an ideology than a plan.
Making it work requires a culture that embraces planning and sharing the business plan with staff. By showing people their role in it, the journey you want to take them on and the potential rewards engenders a feeling of belonging, stability, a sense of direction and being valued. Many studies show both a plan and supporting culture are crucial to commercial success.
3. The ‘story in numbers’ is missing
Even more enterprises fail to define their ‘story in numbers’ – the hard, factual figures that underpin the success of a business plan. These might, for example, include determining the value of your market and level of new business needed to make a profit, defining how many staff you need, operating costs, marketing and sales budgets and capital investment levels.
Determining these key ‘numbers’ and being acutely aware of them enables you to know what has to be achieved to keep the lights on. Initially, it’s about defining as much detail as possibleon a sort of trial profit and loss budget basis – essentially, a forecast. However, as more concrete data and results emerge, it becomes easier to refine and change the business to optimise it.
4. Unclear ideology and values
Businesses frequently feel behaviour and values aren’t really a priority – unless they’re a specific selling point. However, they determine how a company fulfils its purpose and plan, what it will and won’t do as a business and signals that it does things the right way – particularly on ‘hot’ issues like ESG, diversity and inclusion.
In today’s environment, having clarity about behaviours and values is good for business but also for recruiting talent, as people today increasingly take company values and ethics into account when seeking employment. Produce a statement of values and make it available to your staff and externally. Employees should understand what it means to work in the organisation, and your values must be projected externally through your marketing, social media channels and all aspects of your output. Use your values and behaviours to create a business environment that provides psychological safety, something companies tend to get wrong or overlook.
5. Winning business is not made a priority
A big issue for many start-ups is that, rather than focusing on winning business, they try to create a niche for themselves too quickly, which can actually be self-limiting and make it difficult to generate income.
You need to prioritise winning new business and consider any potential openings that materialise, because all your core objectives, including ideological ones, are much easier to deliver with income. While it’s important to have a purpose, plan and values, you need to be agile and pivot to exploit new opportunities and changing markets as they emerge.
The opinions expressed by third parties are their own and not necessarily shared by St. James’s Place Wealth Management.