We all make mistakes. Here's how to learn from yours.
Even the most successful business owners make mistakes. That's how they learn and grow. But what if you're just starting out in business and haven't had the chance to err yet? Never fear: You can learn about business blunders--and avoid making them yourself--by studying the mistakes of others.
Richard Z. Gooding, Ph.D., a strategic planning consultant in Phoenix who wanted to identify which pitfalls posed the greatest threats to new businesses, asked a group of 40 senior executives in 1995, "Why do new products or services fail?"
The skeletons in their collective corporate closet revealed that companies large and small suffer from many of the same ailments. Timing, they said, is crucial--especially when introducing a new product or service, because entering a saturated market can be as disastrous as entering the market too early.
Other problems responsible for failed business ventures include miscalculating market size, underestimating costs, failing to differentiate a product or service from its competition, overestimating sales volume and undercapitalization.
But the biggest problem, says Gooding, is not understanding the customer. "People have great business ideas all the time but don't consider what their customers' needs might be," he says. "But by going out and talking to customers, you can find out what they really need and what their problems are--and then you can find a solution to them."
To help new small-business owners identify and anticipate problems, Gooding has published a booklet called But What Could Possibly Go Wrong? that lists 56 of the most common reasons businesses fail. For a free copy, send a self-addressed, stamped envelope and your business card to Strategic Advantage Inc., 4321 E. Woodland Dr., Phoenix, AZ 85044.
Strategic Advantage Inc., (602) 759-7562