Starting a new business is challenging. I'm constantly researching the things that people have done to make their business start-ups successful and I can tell you that it takes a herculean effort to create a successful business. Many factors come into play such as your skills, your dedication to achieving your goals, and conditions that are completely out of your hands such as government shutdowns that halts the awarding of any grant money or loans. But one thing I have learned from studying successful entrepreneurs is that the more successful business start-ups did a couple of things really well. First, they avoided the common business mistakes most others made when starting out. And second, if they did make any of these mistakes they were able to learn from them and quickly apply that knowledge to make their situations better.
Based on my research I've compiled a list of the 10 most common mistakes people make when starting out. As you read through the list you may find that many of these mistakes seem like obvious ones to avoid. Although they may be obvious there are still large numbers of people making these same mistakes over and over. Use this as checklist to make sure your start-up avoids the fate that many suffer.
1) Bad concept
This should go without having to be said but I'll say it anyway, if your initial idea is bad then no good will come from it. Check your ego at the door and make sure that you idea is A) practical B)has a target market that wants or needs it and c) that target is big enough to sell your product/service to it at a profit.
2) Poor planning
You would be amazed at the number of businesses that are started without a business plan. And I'm not talking about a 30 page, single spaced document with all the charts and graphs a banker would love. I'm talking about a simple plan that's thought out and written down. First off, the act of writing your thoughts down will force you to think about them in ways you haven't when they're bouncing around inside your head. Second, having a plan gives you something concrete to work against.
3) No research
Have you ever heard the term 'look before you leap'? When it comes to starting a business this is critical. In order to give yourself a real chance at success you must fully understand the industry you are about to enter, the competition that currently occupies that space, and the ways in which you intend to carve out your niche.
4) Underestimating capital needs
Many promising businesses fail because they simply don't have enough money. Money is the life blood of any business venture. Weather you need money to create a product demo or to expand by hiring staff or launching a bigger marketing campaign, you're going to need money. But more often than not, most money issues come into play when people don't realize how long it will take to turn a profit in a new business. Relying on savings, credit card debt, or the generosity of family and friends will probably run out before profits start rolling in.
5) Lack of focus
By their very nature, start-ups are chaotic. Entrepreneurs are required to wear many hats in the beginning. But the best entrepreneurs have a way of focusing on the things that will deliver the biggest return for their business. Not focusing on the most important things that impact your business is a mistake that will definitely lead you to failure.
6) Hiring the wrong people
Not every business needs employees. My business for example is pretty much a one man show except for the things that I outsource. But for those businesses that do require staffing its important to find the right people with the right skills and the right temperament. When your business is small and just starting out you have to rely on your team to do the right things to grow the business. Choosing the wrong folks can have a devastating affect.
7) Putting all your eggs in one basket
Many people will tell you that it's risky to start a business and they're right. The successful business owners aren't the ones that avoided risk, they're the ones that managed their risk well. One risky thing that many new businesses should avoid is relying to heavily on few suppliers or a few customers. You can't afford to have the future of your business tied to one supplier, what if they go out of business? And what if your major customer that represents 80% of your orders suddenly decides to go over to your competition? That's much too risky for my blood
8) Giving up too soon
Many people give up inches from the goal line. They think that after a few rejects and no orders coming in that it's time to throw in the towel. It may be but far too often many people don't have the discipline to weather the tough times and stay the course. To be successful you have to be resilient.
9) Improper system for measuring performance
You have to have a clear understanding of how your business is performing in some key areas. Without a proper system in place you can have incomplete or out of date information. This information is what you will need to make the necessary decisions for your business. Without proper information, any decisions can lead to ruin.
10) Lack of believing in yourself
This is your business. Your idea. Your blood and sweat. If you don't fully believe in it then no one will. I come across many business wanna bees that talk about their business like they talk about their grocery shopping list. You should be jazzed up about your business and ready to shout it from the mountaintops. That type of passion for business is what gets you noticed and what creates opportunities for you. You only get that way if you believe 100% in your business, in it's value, and in your abilities to run that business.
Building a new business isn't easy. It takes a huge amount of personal sacrifice, consistent efforts, and a bit of faith. It's not for everyone. If you want to be one of the successful ones then you should do your best to avoid the mistakes listed here. If you've already made some of these mistakes figure out how the best way to not make them again. Avoiding these mistakes can be the difference between your business being one of the failures or one of the success stories.
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