Common mistakes to avoid when starting a new business
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Posted: Wed 29th Jun 2022
Are you born an entrepreneur or do you become one? The answer has to be a combination of both. But success doesn't come without a vocation and hard work. Being an entrepreneur is a continuous daily learning process – you learn from your successes as well as your mistakes.
Among these, some are inevitable and will help you to adapt your initial strategy. You must avoid other errors wherever possible. Let's have a look at some of the most common business mistakes and how to avoid them.
Immediately striving for perfection
As a new entrepreneur, you're likely to fall into one of two camps on this.
You may dive in with both feet, full of enthusiasm and with little or no preparation. This has the advantage of getting you going quickly, with the initial excitement of starting your business giving you momentum through the early learning stage.
However, there's also a risk that you hit significant problems early on, which may discourage you and ultimately cause you to give up.
Or, you may spend ages planning, preparing and tweaking before you feel ready to even consider launching.
Yes, you'll be properly prepared. But for some people this is a delaying tactic (often an unconscious one), allowing them to keep putting off the moment when they take that big scary step into running their own business.
What's more, no matter how carefully you have done your research, there will be things you need to change almost immediately. So you'll need to stay flexible and not wedded to the plan you have spent so long developing.
Neither approach is ideal, but the bigger risk is to procrastinate for too long in pursuit of perfection. Far better to make a start, however small, and then adjust and hone your business offering as you progress.
Not knowing your true motivation
Why are you starting out in the entrepreneurial world? Have you genuinely reflected on what being an entrepreneur means? Have you been taken in by the stories of new companies that are a runaway success?
You need to know your motivations and attributes but, above all, your limitations. Then you must look for ways to work around them.
Basing your business on a hobby, without checking there's a market
It's essential to love what you do. Most people spend long hours at work, and when it's your own business that time may even increase.
So it's crucial that you care about what you do, and that it's aligned with what's important to you in some way. Because this will help you keep going when you hit a difficult patch. And you will!
However, some entrepreneurs make the mistake of assuming they can make money out of their hobby, without thinking this through properly or testing it.
If you're planning to turn your hobby into a business, first identify:
what you yourself spend money on in relation to your hobby
how much you typically spend in a month
how many people there are out there like you who might do the same
Also make sure you won't be offering something that's already readily available at the same or lower cost. What is it that will make what you offer different from what's already out there?
Wanting to help or serve everyone
This is a really common mistake, not just for new entrepreneurs but also for many longstanding business owners who should know better. Many of us assume that the bigger our potential audience, the more business we'll get. Wrong!
People are far more likely to buy from you if they feel you're speaking directly to their want or need.
Once you know exactly who your product is best suited to, you can speak directly to them in all your marketing (for example, on your website, in your networking conversations, in your adverts, on social media and so on). So you need to identify your ideal customer and focus in on them.
Spending too much time writing your business plan
We have to admit that preparation work is essential. But you need to work fast, and it's recommended you test your business idea as soon as possible.
You must combine speed, efficiency and excellence. Ultimately, in the long term, you also need to strive for perfection.
This video tells you how to avoid early-stage mistakes by building a strong team, learning from your customers and developing a flexible mindset:
Choosing the wrong business partner
When creating a new company, everyone's interested and wants to get involved. However, entrepreneurs can often underestimate the differences in people's strategies, personalities and motivations.
So, take your time before you begin considering joining forces with a business partner. Get to know each other well and the real motivations behind any potential partnership.
Not working on your marketing plan
Having a marketing plan is critical for your business's long-term strategy. Don't wait to start planning your marketing until you finish developing your product or service. Then, finally, be ready to launch it on the market.
Not choosing the right product
Many new companies are too diverse and offer a range of products or services as a way of ticking all the boxes. Instead, focus on your strengths before you diversify. A vision that's too comprehensive in the beginning can cause problems early on. Consequently, it will waste your time, energy and money.
Heading in the wrong direction
If your project doesn't go well right from the start and you get negative feedback, you're the one to blame. You need to react and adapt since your potential customers won't adapt to suit you.
It's like the story of the driver going the wrong way down the motorway, wondering why all the other cars appear to drive in the opposite way to him.
Lacking a plan B
A character in a famous 1980s American TV series often said: "I love it when a plan comes together". Unfortunately, in real life, this rarely happens. Even if you believe in your idea, you need a plan B (and even a plan C) for your project. In this way, you won't get stuck as soon as you meet the first unforeseen hurdle.
Dealing with incompetent colleagues
Just as choosing the right business partner is essential, you must know how to select a team to trust to be competent. Devoting too much time to supervising or even correcting the mistakes of an incompetent team can be a source of problems over the medium term.
Underestimating your financial needs
Launching your product or service will always lead to some unforeseen situations. These will automatically involve more costs. So, you need to set aside reserve funds within your budget in case such problems arise. It's crucial at the start!
Having too tight a schedule
Starting and launching your new company is likely to take more time than you anticipated. As a result, you need to think about flexible terms and adapt timings in case of unexpected circumstances.
Believing you can do everything on your own
As an entrepreneur, being too proud (which is a typical human trait) won't serve you any purpose. So, get support from the very start. Share your idea with business mentors, experts, business advisers or experienced entrepreneurs.
Failing to manage your time well
Leading your time is one of the main mistakes that entrepreneurs make and isn't easy to correct. However, it's possible to lessen the impact. For example, a common error is devoting too much time to developing your product or service while neglecting your sales. Without sales, even if you have the idea of the century, you won't make any progress.
Not getting any training
So, are you convinced that becoming an entrepreneur is your destiny? That's great! Indeed, having this conviction is essential. But do you have the training and knowledge to meet the criteria essential to any good business owner? For example, you need to be trained in basic financial management and accounting to avoid confusing a sale with a profit.
Being too conservative
An entrepreneur is a creator who continuously needs to express themselves through their entrepreneurial activities. Building a solid base is good, but you need to develop it to look for new opportunities and proposals to grow and not stagnate.
Neglecting your network of contacts
Having a network of contacts is essential. It should include potential partners, mentors for support, and customers. As you can see, an entrepreneur needs to have a good number of contacts to succeed.
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