Monday, December 1, 2008

What are the Common Mistakes When Starting a Business?

Hi there kabayan, it’s me again, your geeky negosyante-wannabe, and our topic for this post will be about the common mistakes people make when they first start their business, and the ways we can avoid making those same mistakes.

(This one’s from the QA segment of Bam Aquino’s “Start Up” show on ANC, which was aired last November 13, 2008 at 8PM.) To answer the sender’s question, Bam Aquino (the host) interviewed Willy Arcilla, the President of Business Mentors, Inc.

(START)

QUESTION: “I just started a business making t-shirts for my school. And as it is my first stab at business, I wanted to ask what are the most common mistakes people make when starting out and what can we do to prevent ourselves from committing the same mistakes?” - Rica

ANSWER:

BAM: Mistakes for a startup, Willy. In your experience, anu ba ‘yung nakikita mo d’yan?

WILLY: Very good question. Um, well, first of all, a, I like to tell you the good news and bad news about t-shirts. The good news is obviously everybody wears t-shirts. The bad news is, everybody also makes t-shirts. In other words, um, my only suggestion for Rica is, make sure she gives her (prospective?) consumers a meaningful reason to buy, to prefer her t-shirts over the next door, over every body else’s t-shirts.

TIP: Give customers a reason to patronize your products. (Source: Start Up show hosted by Bam Aquino)

Because like we all know, every Tom, Dick and Harry is, practically into the t-shirts business, right? So she has to really define what sets her apart from all the rest.

BAM: What’s the innovation in her t-shirts, right, what’s different. Ok, her other question was, common mistakes for people starting out, you know. In your experience, would you know what common mistakes there are?

WILLY: Yes, I think, um, I would think, Bam, it’ probably in the area of defining who their consumer is. Who’s going to buy the product, ok? The first and the most fundamental question everybody should ask, “Who’s going to buy my t-shirts? Who’s going to buy my new beverage?”

BAM: It’s an outward, parang outward look, no? Kasi some, some entrepreneurs really get so consumed by their own ideas, right, they forget to ask the consumers what they want.

WILLY: That’s absolutely right. so define in, (have this clearly?) in your head, ok, who’s gonna buy, alright, who do you expect to buy this – demographically, psychographically, ok, and also, why they’re going to buy this.

(END)

Just some thoughts:

I don’t know if it’s just me, but I think that Mr. Willy answered the question(s) quite vaguely. :-) He didn’t even answer the second question. The tip which “Start Up” gave was to GIVE CUSTOMERS A REASON TO PATRONIZE YOUR PRODUCTS. How? Siguro (again, I’m not an expert – yet), you’re product needs to be unique and should have quality. In my opinion, you really can’t sell your product through clever advertising/marketing alone, you need to prove to your consumers that your product has value, that it’s effective and that they are getting their money’s worth.

Let me cite an example – I know one product, a detergent powder, whose manufacturers often make clever ad campaigns on TV, but in reality, their product is not as effective as they portray it on TV. I know this because I was able to try using their product before. Then there’s this other detergent, which in my opinion, is very effective, that even if they wouldn’t advertise, their product would surely sell. My mother likes it, my father likes, and I like it. (Now you know that I come from a family of labanderos. :-)) I think that the word-of-mouth way is the most effective way. Just think of Google.

So going back, you need to give your customers a reason to patronize your product. If I remember it right, if you’ve watched the movie, “Pirates of Silicon Valley,” the character of Bill Gates had one line there that goes something like: “You know what (I think Bill was talking to Paul Allen and Steve Ballmer), for us to survive, we must make people need our product.”

So in my opinion, one of the best ways to make your business truly successful is to make your product or service so effective/useful that people, instead of looking at your product/service as just another alternative or just a luxury, they will look at it as a necessity. But how?

In my opinion, and I agree with Google, just focus on the customer. Focus on the customer and everything will follow. I believe that businesses, no matter how small, should study and copy how Google (the company) runs/operates its business(es). To find out what Google’s philosophies are, click here.

Common Startup Mistakes

So based from the above interview, I came up with the following mistakes that people make in starting a business.
• Failure to study your target market. This includes what Bam mentioned, “failure to ask what consumers want.” Your product won’t sell if nobody wants it. Study your target market. Give them what they want. Remember (I know you’ve heard this before), you can’t sell airconditioners to Eskimos.

• Failure to make an innovative product. Your product won’t really sell if it’s just another boring shampoo in the market. Make your shampoo super-fragrant and super-relaxing that people will be so relaxed they’d be put to sleep while taking a bath! :-) You get the idea, right?

• Failure to have the right goal for the business. I know, business is to “make money” as fish is to “the sea.” (What?!) :-) Let’s not fail to see beyond pure “money-making.” In my opinion, those start up businesses that are more customer-centric than money-centric are the ones likely to succeed.

So how do you avoid making the 3 mistakes above? Don’t fail to study your market; make innovative products; and be more customer-centric.

NOTE: I am not a business guru, I’m just an ordinary Pinoy “moneyminder” trying to teach myself things about business. If you have any comments about this entry, feel free to post them below.

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