Starting a business can be rewarding, but it comes with problems that can either support or derail your venture. Many new entrepreneurs jump into entrepreneurship. Although passion is great, passion alone will not get you through it all. Understanding the mistakes others have made can help you save time, money, and headaches.
This article will describe the top 5 mistakes new entrepreneurs need to navigate their way past them, with case examples, expert advice, and lessons learned.
1.Learning No Market Research
Many new entrepreneurs buy into the hype of launching a product without knowing anything about their market. This is one of the quickest ways to fail.
Why This Is Problematic
Without knowing who your customers are, what they are looking for, and what your competitors are selling, then your chances of creating something someone wants will be left to random luck.
Expert Advice
“Marla Tabaka at Harvard Business Review reported that 42% of startups fail because of no market need.”
Practical Example
Consider a tech startup that created a costly fitness app; including features nobody wanted. What did they do? They launched it flat out without testing it on real users. Six months after launching, the sales were nearly zero.
What Should You Do?
- Interview potential customers.
- Research your competition.
- Create an extremely simple version of your product (MVP) before you go too deep in the woodwork.
2.Insufficient Financial Management
Many new entrepreneurs fail to factor in their costs and quickly run out of money.
Why It’s a Problem
Cash flow is the life source of your business. Without proper budgeting, you may grow too fast or not fast enough.
Case Study
A small bakery opened and began having success selling products but closed after one year because the owner failed to track expenses. He overspent on supplies and labor, leaving little profit.
Actionable Advice
- Document every income and expense.
- Budget using software such as QuickBooks or Wave Accounting.
- Maintain at least a 3-month emergency fund.
3.Trying to Do Everything Yourself
New entrepreneurs often resist allowing others to help, but doing everything yourself slows growth.
Why It’s a Problem
In the end, you will be run down, make mistakes, and put a ceiling on your business.
Expert Opinion
According to business strategist Michael Gerber, “work on the business, not in the business”.
Illustrative Example
An owner of an online store tried to manage the inventory, marketing, customer service, and shipping all on her own. She was exhausted and delayed orders, damaging customer trust.
Actionable Advice
- Start by finding someone to help with a small pieces (graphic design, administrative work, etc).
- As you need help, hire help on a part-time basis.
- Work in your strengths.
4.Omitting the Marketing and Branding
Numerous new business owners hold the belief that “If the product is good, they will come.” Which is hardly ever true.
Aspects of the Problem
In our competitive world today, it is all about visibility.
Case Study
Two cafes opened in the same location, the one using social media marketing grew 3 times faster than the one that’s only relying on foot traffic.
Actionable Next Steps
- Use social media and do it consistently.
- Build a simple, professional brand.
- Experiment with using content to interact with your audience.
5.Missing a Business Plan
There are those entrepreneurs that use enthusiasm to get started, without any real plan or direction.
Aspects of the Problem
You can’t measure your progress as you work to build your business (if you are not following some sort of plan). You will have a much harder time attracting potential investors.
Expert Opinion
SCORE said businesses with written plans grow 30% faster.
Practical Example
A clothing startup set out to write a very detailed business plan which contained information about their target markets, their pricing, and the stages of growth. They returned a profit within 1 year.
Actionable Next Steps
A good business plan will contain:
- Your target market audience
- Your financial projections
- Your marketing strategy
- Your roadmap for growth.
In Closing: Don’t Make the Mistakes—Fast-Track your success
All successful entrepreneurs made mistakes—only those who are smart learned early and didn’t make the biggest mistakes. When you understand your market, you are prepared to manage your finances, empowered to delegate work, willing to invest in marketing, and capable of developing a business plan will help you make that journey to sustained success.
Call to Action
Interested in grow your business the smart way?
Take one of the mistakes listed above, and take a step today to make a change.
Success starts with awareness and action.
