Five Mistakes Entrepreneurs Make and How to Avoid Them
Stepping out on your own and trying to make a go of a business idea is intimidating to say the least, it’s a big decision and many of us are too scared to attempt it. Plagued by neurosis and a decent dose of imposter syndrome, most of us will never take the leap of faith required to start a business.
If you asked most people what was holding them back, they’ll tell you it comes down to a fear of failure. No one wants to fail at something, especially something we think we’re good at. If you’re a good baker you’d hate to fail at opening a bakery, the sting of failure in your field of expertise is extra biting.
But the truth is 50% of businesses fail in the first five years. The odds are not in your favour in the long run either – by the ten year mark the failure rate is 70%.
But what causes so many fledgling businesses to fail and why is it so hard to set up your new business venture for success?
Don’t worry we’re going to cover all this and more below. We’re going to be talking about five of the most common mistakes entrepreneurs make and how to avoid them.
In this article we cover:
Knowing your competition
Not Outsourcing
Scaling too fast
Tiny Margins
Not having a clear goal\
Know your Competition
Whatever your business venture is, whatever your idea or your product, there is someone out there doing something similar, if not exactly the same. That isn’t to say your idea isn’t unique but thinking you’re the only person doing this in your niche is a mistake. In business it’s very important to know your competition.
To understand your position in the market and to find your ideal client you must know who your competitors are. Find your top five competitors and evaluate their approach, what are they doing well? What are they not doing well? How do you differ from them? This will help you to refine your marketing approach and your business plan.
Not Outsourcing
When you first start out, you tend to put yourself through the ringer, doing every task that comes along and this happens for a few reasons. This is your baby, you’ve done all the work up to now, you know the product, you know the market, you know the plan and you’re trying to save money. In the early days a lot of the decisions are made from a frugal mindset.
Not outsourcing tasks or projects that are either too small for the investment of your time or too specialised for you to do a good job on is a mistake many entrepreneurs make in the beginning. It leads you to feeling burned out and costs your business revenue in the long run.
But each business venture reaches a point where you’re going to need to need to outsource. This might be for smaller tasks that are taking up too much of your time or it might be for projects and consulting that is completely out of your wheelhouse. The benefit of outsourcing smaller items is it gives you more time for more important aspects of the business, like big picture planning.
Outsourcing larger or more specialised projects and tasks means you’ll get a professional opinion from an outsider perspective which can be immensely valuable in those early days of your business.
Scaling too fast
It’s an easy enough mistake to make. Things are going well, people are buying product so you decide it’s time to invest in a warehouse for stock and a customer service team. The mistake of scaling too fast is one made by many entrepreneurs.
Scaling the business is not a decision to be made lightly. You have to factor in lows and peaks in the market, set up costs and ongoing costs. Many businesses have failed because they saw some wildly successful moments and mistook a peak in the market for a median level. They threw all their money into expanding the business and in six months they have too many employees and no profit to pay.
The key to knowing when it’s time to scale is in the sustained success and growth of the business. Slow and steady wins the race. If you want to know more about how to expand successfully check out this article here.
Tiny Margins
Not giving yourself enough of a profit margin is a very common mistake with young entrepreneurs. It’s understandable, you’ve made this great product or you do this wonderful service and you think you’ll keep prices low to start with, to generate interest and build a customer following. The issue with this is that many entrepreneurs don’t factor in the unforeseen costs of running a business and a low profit margin can mean you’re struggling to catch up with your bills and keep on top of the business cash flow.
It will also mean that you’ll need to increase your prices later. It’s a little bit like that adage robbing Peter to pay Paul. If you build a following of clientele based on low prices you may well lose them when you increase your prices. Whereas if you enter the market at a higher price point with a healthier profit margin you’ll attract a different clientele, willing to pay more for your product or services and therefore finding more value in your product or service than customers interested only in the lowest price point.
Not having a clear goal
This one might sound obvious but you’d be surprised how many entrepreneurs have not established a clear business plan for their business. When you start out you probably wrote a business plan to show investors with projections and market research. When was the last time you review ed that business plan?
Too many entrepreneurs make the mistake of writing their SEO business plan and then once they have started the business not looking back. They start to just roll with the punches and make decisions on the fly without considering the larger impact on the business. This can lead many entrepreneurs to lose their footing and see their business pitter out rather than thrive.
It’s important to review your business plan and adjust it every 3 months, set your goals and projects. How do you want to grow in this quarter and how does this growth factor into your long-term goals? Ask yourself what steps and benchmarks you need to hit this quarter to be closer to your five-year goals. This background removal also use for Microsoft Windows/ Windows use.
Staying the course and making decisions based on your long-term business plan will mean you don’t waste money on passing fads or lose your brand identity trying to jump on trends. This will help you succeed in the long run.
Bottom Line
At the end of the day, you’re going to make mistakes but if you adjust your point of view and understand a mistake is an opportunity for growth and learning, you’ll never fail, you’ll just keep learning. If you want to know more about starting a business check out this ultimate guide here.