Making the right decisions is critical to making or breaking a business. While taking the right decisions is important, it is also essential to steer clear of any wrong decisions and common business mistakes that most newbie entrepreneurs make, which eventually lead to the failure of the startup. According to studies, almost 90% of the start-ups in our country fail within the first five years of establishment, i.e., only 10% of the businesses are actually succeeding.

Out of the 90% that failed, 34% failed from unfit product placement in the market, 22% failed due to a lack of efficient marketing, 15% failed from internal conflicts, 16% failed due to a lack of investment, 6% from a lack of technology or infrastructure, and the remaining failed from legal and operational issues.

Now that, you are familiar with the causes of businesses failing, let us dive into the blog to discuss these common business mistakes.

1. Designing or developing the product or service without considering the needs and tastes of the customers.

Let us take a look at a case study to understand.

Baidyanath is a 103-year-old firm with a 700 crore turnover; Hamdard is a 114-year-old company with a 600 crore turnover. In contrast, Patanjali, a relatively new name in the segment, has been able to achieve a turnover of over 10,000 crores in just a decade of its existence, even though Baidyanath has over 750 patented products while Patanjali has only about 350. It is important to understand the difference between them.

Both firms are leading the Ayurveda market in the country as well as globally, however, one focuses on the needs and tastes of the customers. You can guess which one.

Baidyanath has been manufacturing ayurvedic products for many decades, which include cough syrups, tablets, digestive pills, and many more. However, the reach of the products remained limited due to their specific nature.

Patanjali, on the other hand, tried to combine the power of Ayurveda with FMCG. This gave Patanjali the ability to manufacture everyday consumer consumable goods like toothpaste, which is common in every household. They swapped "dantmanjan" with "Dant Kanti", and "Chavanprash" with "powervita."  This helped them connect their specialty with the real needs of the customers. 

Instead of assuming what the customer wants, entrepreneurs will need to gauge the needs of consumers and then design or innovate their products to ensure success.

2. Being ignorant to the suggestions and feedback of the customers.

Google is perhaps the biggest tech company in the world. Most of you might remember Google's own social networking platform, Orkut. With the entry of Facebook into the market, most of the customers were attracted to the timeline feature on the platform.

Instead of embracing the new innovation, Orkut chose to rely on its model, which proved disastrous for the platform as droves of users abandoned Orkut in favor of Facebook. Couldn't Orkut innovate with the demand? Yes, they could have. But choosing against it led to its downfall.

Now, let us move on to the third common business mistake.

3. Not identifying the target group of customers for your product.

When Steve Jobs quit Apple, the company began drifting towards bankruptcy. Only three months away from confirmed bankruptcy, Steve Jobs joined back as CEO to save the sinking ship.

This was caused since Apple moved their focus from their targeted groups and started to operate like companies like IBM, Dell, etc. As Apple had a targeted group that could afford a bit more for a designer product, the race to cater to everyone left Apple's core targeted group dissatisfied, which contributed highly to its downfall.

It is important that we target customers based on our strengths to ensure they are always satisfied with your products or services.

4. Improper positioning of the product

To understand these common business mistakes, let us take the example of the TATA Nano cars. In a developing country like ours, where the car got a ton of pre-bookings, it failed to deliver on expectations of the company.

Indians treat cars as a status symbol in society and with TATA Nano, they were getting the tag of the cheapest car instead of being associated with the youth and compact nature of the car.

With the tag of the cheapest Indian passenger car, consumers started to disregard the car and look for alternatives and even a second-hand Alto seemed a better option for many buyers. This was not one of the common business mistakes but was a marketing blunder that made the best feature of the car its worst weakness and the biggest reason was improper positioning of the product.

5. Catering to every type of customer, even if they are sometimes in the wrong.

When starting a business, you will encounter several customers who will:

• Try to get maximum work done with minimal investment.
• Not pay on time.
• Ask for credits.
• Runoff without paying.

It is also possible that such pressure may cause your business to shut down as well. According to the Pareto principle, your 20 percent effort should yield 80 percent of the results.

So, as a good businessman, we should avoid customers who give 20 percent results despite your 80 percent efforts and focus on those customers who give 80 percent results from 20 percent effort. By avoiding these common business mistakes, you can improve the growth of your business and, in fact, fast forward it!

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