Seven common business pitfalls and how to avoid them

If you’re facing challenges in your business, this guide will help you overcome them. It outlines seven reasons for business collapse and suggests some remedial action in each case, plus some further resources to help you.

1. No market research

Failure symptoms

Businesses that operate without market research are flying blind. Many new start-ups fail simply because they haven’t done their homework first: and that means lots of market research. It may be fine for a while to go with your gut instincts, but proper market research is the only way to find out what your customers really want or feel about your business - and your staff. It’s a basic tool that all businesses should incorporate in their operational systems. Market research is important because it reduces your risk of failing and therefore lowers the risk of being in business. But more than this it helps you to:

• Make the right decisions.
• Find out if customers are getting exceptional service.
• Fine-tune aspects of your business (such as customer service) that may not be working at optimum levels.
• Discover what your competitors are up to.
• Identify new opportunities: find out what else you could sell to customers.

Case study: Advertising choices

A cartridge recycling company spends $20,000 a year marketing through various media in this order of priority:

• Radio
• Newspaper
• Yellow Pages
• Leaflet drop
• Shop signage
• Vehicle signage

The business then decided to put in place a ‘How did you find us?’ survey, that revealed:

• 36% were existing customers
• 22% were referral
• 16% saw the shop front
• 10% came from the leaflet drop
• 7% responded to radio
• 5% came through the Yellow Pages
• 4% responded to newspaper ads

In fact, almost the opposite from what they spent on marketing! The market research allowed them to prioritise their marketing spend far more effectively. They have now changed from radio advertising to a customer loyalty and referral campaign.

Action to avoid the pitfall

Start using market research to improve your business. Make sure you monitor the results! Remember, you can’t manage what you don’t measure. These Solution Guides will help:

• ‘The importance of market research’
• ‘Developing excellent business systems’
• ‘How to write a customer questionnaire’
• ‘Easy ways of researching your competition’