Tuesday, September 2, 2008

Top Three Reasons Home-Based Businesses Fail

With more than 50% of home businesses failing within the first three years of operation, you may be wondering why you started home based business at all. For many people working from home is cost effective and allows them to spend time with their family. If you want to start a home business make sure you fully understand why so many businesses fail so you can avoid these pitfalls.

Entrepreneurs often make the mistake of not preparing for growth, or setting effective marketing strategies. Most entrepreneurs tend to believe that their hidden talents or diverse knowledge in one area are enough, to create the success they are striving for. But, this is an illusion.

Lacking a Clear Plan of Action

Everyone needs a business plan. Whether your company consists of just you, or hundreds of people, a business plan is your roadmap to success. A detailed business plan will help you to plan and implement your business structure. It should provide a guideline for your business now and in the future. You should be planning marketing strategies, products, services, and your financial goals. Plan where your business will be in one year, five years, and even ten years from now. Don’t think that your company doesn’t need one just because you’re small.

Small businesses need a plan of action just as much as a large corporation. Business plans are great as you can go back at a later point in time and review and refresh your plans. If you want your company to excel and expand in later years, a business plan is a must.

Invest in Your Dream - Not Someone Else’s

Too often, excitement gets the best of you. You’ve stumbled across a new business idea that promises a $60,000 annual income. You have the skills and knowledge to make it work. All it takes is a small investment, a place to operate from, and your time. Invest and watch your profit grow…

Many get rich quick schemes promise easy money and really do sound like a good idea. Thousands of people have invested their hard earned money into these schemes and gotten nothing out of it but disappointment.

Thousands of people have invested their life savings and lost them in money making entrepreneurial schemes. What they usually don’t tell you is the risks involved. Making money is usually never easy so don’t be fooled by schemes that seem to promise you the world. If you want to invest your money to start your own business be smart and don’t throw your money away.

Problem #3: Changing Your Focus

You may have plenty of good ideas that you want to implement all at once. However doing too much at one time can be your downfall. Many entrepreneurs have several products or services they want to sell. Take your time and implement one at a time and get it right before you try something new.

Let’s say you are in the business of writing resumes`. After a business event, you’ve discovered that there is a large amount of money in Network Groups. Thinking that you could interest the business professionals you already market to, you attempt to add this service. Is it a good idea to mix? Is your market interested in what you’re selling?

Selling network memberships takes more then a little bit of knowledge about networking. It takes time: Time to develop contracts; organize meetings; set up events; and keep your members active in business referrals. Think about your target market!

Take time to evaluate any potential new business decisions and determine how viable they are. Always refer back to your business plan and see if new decisions make sense. By carefully considering each new challenge you’ll make smart business decisions that can secure your success.

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