Being an entrepreneur may very well be one of the most difficult jobs on the planet. There are very few career paths that require the same amount of work, skill, sacrifice and commitment. Being an entrepreneur is really hard but also really rewarding. No matter what field you are in, or what type of business you own, it is so important that you understand some of mistakes that tend to plague so many entrepreneurs in today’s market. These are by far the biggest mistakes that any business owner can make. Avoid these mistakes at all costs and you will set yourself up for success.
1. Expecting success right away.
If you are expecting success right away from your business, then you are setting yourself up for disappointment. Yes, it is great to have the confidence and the drive to want to be successful fast, but you shouldn’t expect these results right away. It takes a long time to grow a business. It takes an even longer time to make money from a business.
You need to be realistic about your expectations and try to be patient. One of the many reasons that so many businesses fail so early on is because entrepreneurs expect they can open their doors and just like that they will start making money. Many times these companies go out of business because the entrepreneur can’t afford to pay the rent anymore, they were expecting to earn money right away to cover their expenses. This is why having a cushion to fall back on and being realistic about how much money you can actually make at first is so important.
As any entrepreneur can attest, there is a lot to do when starting your own business. It’s easy to make mistakes in the early days but you can avoid some of them if you know what they are. Many start-up entrepreneurs fall into these all-too-common traps, which can bog down or block their business flow.
You choose the wrong name.
Picking the right business name is crucial to your success. Don’t choose a name just because it’s cute, sentimental or quirky. Imagine your brand going national; will the name hold up to expansion? Is it easy to spell and remember? Does it describe your business or its benefits?
You buy for the sake of buying.
You will need business equipment, furniture, software and electronics, but you don’t need to purchase everything up front. Buy the essentials and upgrade as your business makes money. Keep your capital on hand for building the business; you will need it for networking, marketing and future investments.
You have no marketing strategy.
When it comes to branding, pay a professional to design your logo, website and other marketing materials. You may know your product but your lack of knowledge in to how to represent it properly to your potential client can hurt you. Enter the market with a focused marketing strategy and first-class materials that will elevate your business to a professional level from your first appointment on.
You work in isolation.
Many entrepreneurs can work for days on end and not see another human being. Get out of your pajamas and surround yourself with other talented and self-motivated professionals. Join networking groups, volunteer, serve on boards and other activities in order to generate new ideas and connect with like-minded individuals.
You underprice.
To determine what you should charge, look at your entire cost of doing business, including materials, labor, rent, utilities, taxes, and more. In the beginning, you should be able to cover your expenses and break even or make a small profit. Also, research competitive pricing; see what others are charging for similar services. Don’t venture too far off the average, either high or low. The more specific your niche, and the more in demand you are, however, the higher the price you can charge.
You give in to distraction.
Do you check email every time it dings, or spend hours surfing the Internet? Distraction eats up time and profit more than any other factor. Determine the specific activities that generate income (client appointments, contacts and networking) and spend the majority of your day on them. Set a formal work schedule and stick to it. Make income-generating tasks your first priority every morning, fill in with housekeeping chores, and hire out tasks that can be done by others.
Before starting any business, remember to do your research, network with other successful business owners, establish a budget and stick to it, and you will eventually achieve the profits – and the satisfaction – you desire.
Not spending enough money or spending too much money.
As a new entrepreneur, money is likely to be one of your biggest concerns. Pre-launch cash flow is likely to be close to nil, so making and saving money will usually take priority over everything else.There are two mindsets I tend to see among new entrepreneurs: Either “You have to spend money to make money” or “I’ll spend the bare minimum until I have some decent cash flow.”
Both of these attitudes, when taken to the extreme, can be harmful. Spend your startup cash wisely, but don’t be afraid to invest in good people and quality products. This will bode well for you in the long term.
Thinking you have no direct competitors.
The excitement about a new product or business can often lead new entrepreneurs to think they really have no direct competition, or that their product is so head-and-shoulders above those of their rivals that they’re in a category of their own.
In reality, it’s extremely rare to have no direct competitors. Unless you’ve invented a completely new product, there will be someone who already has market share in your niche. Do your due diligence to find out what these companies are and how you can differentiate your business.
Making hiring decisions based on cost.
This is closely tied to number one, but is so important it deserves to be mentioned separately. When funds are tight, it’s tempting to skimp on the cost of new hires. The problem with this strategy, however, is that you’ll end up paying in the long run.
Low-cost employees and consultants are usually low-cost for a reason -- they are more likely to be inexperienced, unskilled or unreliable (or all three).
Not setting attainable goals.
New entrepreneurs can be so enraptured by their “big idea,” they work without a solid plan. But the reality is you must set realistic and attainable goals in order to succeed.
Make a point of setting both short- and long-term goals, and make sure they’re specific. Don’t just say, “I want to make $1 million this year.” Set a reasonable goal, and then determine what specific steps you need to take to reach it.
Not thinking about marketing.
“If you build it, they will come.” This is a common belief (sometimes conscious, sometimes not) among new entrepreneurs. They think that their products are so revolutionary that they can just rely on free PR and word of mouth.
In reality, the vast majority of startups will need to invest heavily in marketing. This may include SEO, content marketing, PR and paid advertising. Take a look at where your competitors are spending their marketing dollars, and ask yourself how you can compete and differentiate yourself.
Having too small margins.
Having a healthy profit margin will be critical to your success. Setting it too low now will make life infinitely more difficult for you in the future -- your customers likely won’t be thrilled when you need to raise your prices later on.
Take a look at your production and operating costs, and determine how much flexibility there is. Can you reduce these costs in the future if necessary? If not, choose a higher profit margin now to accommodate these costs.
Thinking you can do it all yourself.
In the beginning, it’s common to think that no one can do the job as well as you can. You know your products inside out, and are the only one who truly has the passion to make the business succeed.
But this is not only a recipe for burnout, it can actually significantly impede your success. Having a knowledgeable, experienced consultant or mentor can give you much-needed objective perspective on your business and market.
Being incapacitated by fear of “what if’s.”
Robert F. Kennedy said, “Only those who dare to fail greatly can ever achieve greatly.” Starting a new business is scary, and isn’t for the faint-hearted. Being scared of failure and rejection is understandable, but letting yourself become incapacitated by this fear can significantly hinder your progress.
Recognizing common fears is a great first step, as it reassures you others have been where you are now.
Putting your product first and people last.
When creating your product and determining your business model, it’s critical that you have a customer-first mentality. Yet many new entrepreneurs are so concerned about making money (understandably) that they forget the key to having a sustainable business -- having satisfied, loyal customers who will buy over the long term.
It’s not easy being a new entrepreneur, and mistakes will be an inevitable part of the process. But that doesn’t mean you need to repeat everybody else’s!
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