| In my career as a business consultant I have | | | | into play as well but first just focus on the per unit |
| evaluated numerous businesses from high-tech | | | | costs. |
| start-ups looking for venture funding to small | | | | 2. No Marketing Plan |
| businesses conducting selling personal services. The | | | | Not having a marketing plan or underestimating what |
| two biggest things businesses seem to get wrong | | | | amount of marketing is necessary to generate a sale |
| are: | | | | is the second biggest mistake start-up businesses |
| 1. No Understanding of their Break Even Point | | | | seem to make. Frequently, if it is a service business |
| Understanding how much money you need to make | | | | or some type of franchise, small businesses got into |
| to cover your costs may seem like an obvious thing | | | | the business because someone sold them on how |
| to do but many businesses don't seem to understand | | | | easy it would be to do the particular business. |
| this. More specifically, businesses often don't calculate | | | | Oftentimes this resulted in vague or undefined |
| what it costs to produce or deliver a single unit of | | | | explanations of how to market the business. |
| their product or service. This is where a basic | | | | Activities like going to networking meetings, |
| break-even analysis should begin. If you are selling | | | | advertising in the paper or flyers or simply putting up |
| widgets, figure out the cost of all the inputs to | | | | a website are the only advice and instructions given. |
| manufacture that widget. How consistent is the | | | | No accounting for how long it would take to |
| pricing of the inputs. A good example of how this can | | | | realistically generate sales from these activities is |
| be underestimated is with gas and commodity prices | | | | given or understood. |
| sky-rocketing these costs are likely to have gone up | | | | The Result |
| in the last six months. If you are selling a service this | | | | The result of making these two big mistakes is an |
| is a bit harder but you need to calculate things like | | | | unprofitable business. Either sales are made but with |
| office supplies and products (toner, printing costs | | | | no regard for the actual costs is the outcome, no |
| etc.) whatever the per unit costs are of delivering | | | | sales are made and therefore no income or both. |
| your service. Overhead and factoring this in comes | | | | Either way the business then fails. |