Each day thousands of news businesses are started up around the world. Some will eventually succeed, but many will fail. Researchers Kuratko and Hodgetts advice prospective entrepreneurs to avoid six pitfalls in selecting new ventures:
1) Lack of objective evaluation
Falling in love with an idea doesn’t guarantee success. All ideas must be subjected to rigorous study and investigation.
2) No real insight into the market
No product is instantaneously profitable, nor does its success endure indefinitely. It is important to develop the right marketing plan. Timing of introduction is very important, and product life cycle cannot be ignored.
3) Inadequate understanding of technical requirements
The development of a new product often involves new techniques. Failure to anticipate technical difficulties can sink a new venture.
4) Poor financial understanding
Many entrepreneurs are overly optimistic with regard to estimate of funds. Sometimes they are ignorant of the costs or underestimate them.
5) Lack of venture uniqueness
A new venture should be unique in order to attract customers. Entrepreneurs should adopt product differentiation strategy.
6) Ignorance of legal issues
Workplace must be safe for employees. Products and services must be safe and reliable. It is also important to protect one’s inventions and products through patents, trademarks and copyright.
Reference: Kuratko & Hodgetts, Entrepreneurship – Theory, Process, Practice, 7th edition