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Starting a new business can be an incredibly time-consuming and energy-sapping experience. There are so many things you need to think of and so many things that could go wrong in the process. While some people think that they have all of the control in the world over each and every aspect of their new business, they might miss some obvious pitfalls. This is why it's far better to understand what can go wrong before it actually goes wrong. We suggest you ask yourself a few questions before you start your own business.
Here are some examples of mistakes to avoid when starting a business:
#1 Not having a plan and failing to recognize your strengths and weaknesses
A business plan is the first step to building a new business. The reason why some new business founders choose not to do this is mainly down to time and resources, but this is absolutely not something that can be overlooked. The plan will form the basis of everything that you try to do from that moment on (even though it can be a fluid document that adapts with the times) and should inform every decision that you make. Having it all in your head may seem like its workable, but the reality will tell you something else entirely.
And then consider this when formulating your plan. What is it that you do incredibly well? Exploit that. What is it that you need to improve? Work on that or try to circumvent that aspect completely.
#2 Thinking it’s about raising capital
There are many creative ways to fund a business but starting one isn't just about raising capital.
For many founders of new businesses or startups, it becomes all about fundraising and that’s a mistake. Yes, this is a vital consideration, as the business will not survive if it does not have the funds to succeed.
However, at the same time, you need customers, so reaching out to your target audience is every bit as crucial as raising the funds required to pay the bills. It therefore becomes a dual play that is required – focusing on only one thing is the surest way to fail under these circumstances.
#3 Slow decision-making
You want to make sure your business is highly adaptable to technologies, trends and feedback and can take decisions quickly. A common mistake made by small businesses is that the length of time it takes to make a decision is just too long, and that by the time a decision is made, things have moved on.
There are a number of decisions that must be made quickly, such as which investors to go with, which customers to focus on, decisions of which suppliers to go with, and so on. From a marketing perspective, procrastinating over marketing ploys can mean that the user you have targeted has moved on, or will respond to a slightly different approach than the one that was originally earmarked. Things move incredibly quickly, so you must make decisions which respect this evolving environment.
#4 Hiring in a rush
Hiring the wrong candidates is one of those common mistakes you want to avoid in your entrepreneurship journey. Many new small business owners love the idea of getting someone on board to share the burden, which is the right approach (as the point below on micromanagement will emphasize), but another crucial mistake to avoid is hiring before the business is ready.
This will lead to two difficulties:
1) The business may not yet be quipped to pay the wages of another person, and even if it is at the moment, that may take away vital capital that may have been better utilized elsewhere in the business. Very often a new business will have a finite length of life it its current form, so maximising resources in that period of time is the priority.
2) A second issue is that in your rush to recruit you may end up bringing the wrong kind of person or the wrong skillset on board. Give yourself time to understand the character and expertise that the business requires, and then hire based on those principles, not on who it is that you would like to work with (which is important too, but should take a backseat in comparison to those other elements).
#5 Not using contracts
There are many proven ways entrepreneurs can stop sabotaging their business growthand protecting themselves is one of them. The history of business is littered with tales of relationships that broke down as soon as a little success was achieved. By no means should you expect this to happen to your business, but the lesson to be learned here is that contracts need to be used, even in the early days of a business, in order to establish ground rules. It’s all well and good saying that contracts are unnecessary because you are a group of friends working together (as opposed to colleagues) but a business venture requires the rules of business to be adhered to, and respected.
#6 Working for free
As the founder of a startup, considering what to pay yourself is a difficult decision to make. Indeed, deciding on the remuneration of employees can be a whole lot easier than settling on a package for yourself – if indeed you decide on anything at all. Following on from the last point, the rules of business do need to be adhered to a certain extent, and that means that you simply cannot afford to work for free (how will you survive?) but it then also doesn’t reflect accurately on the cost of the business.
At the end of the month, you need to pay the bills. So, don't work for free. If you're good at something, you should be paid for it. As an entrepreneur or business owner, you want to achieve financial stability.
Similarly, don’t pay yourself too much either, as that money will probably be better utilized within the business. It’s a minefield making these types of decisions, so seek respected advice and perhaps use a model whereby your salary is connected to the money that you are bringing in.
#7 Failing to pay attention to the competition (or getting obsessed)
As an astute startup founder, you can learn a lot from your competitors. Indeed, you don’t need to reinvent the wheel and can utilize a lot of the approaches that your competitors use in terms of product delivery and marketing (but it is also important to establish your own voice too). When competitors innovate, you need to be on the ball to react, and so keeping a close eye on the competition just makes smart business sense.
At the same time, don’t let it lead to an obsession. Yes, it’s important to understand how your competitors go about things, but at the same time, you must be your own entity with your own ideas and obsessing over what your competitors are doing can be an awful waste of energy.
#8 Micromanaging
As the boss, much is expected of you (not least by yourself). However, a typical trap that startup founders fall into is that they micromanage every aspect of the business, which becomes unsustainable. Micromanagement is the curse of the small business owner
Delegation of tasks is highly recommended for startup founders, entrepreneurs or new business owners. That of course means surrounding yourself with the right people, but then trusting them when you have them on board., and effectively strangles the life out of both the individual and the business. Utilize the skill and creativity that is at your disposal in the form of talented people – they will give the company fresh impetus.
#9 Neglecting your life
Anecdotal evidence would suggest that the founders of startups were working 25 hours per day in the early days to establish the business. The reality is that starting a business can be really hard work, and some sacrifices will need to be made, but at the same time, totally neglecting your life at the time will only have detrimental effects on your health, happiness, and eventual motivation going forward.
Dedicating all of your time can have an effect on relationships, and you have to consider whether the impact really justifies what you are trying to achieve here. Try to find a balance in what you do, and if that is not possible, then maybe this is not the right thing for you.
#10 Not understanding your customer base
One of the first activities to complete when starting a business is the identification of your target audience. This will involve drawing up a detailed profile of a typical user, which will then help you pinpoint every element of your approach.
Not only does having a user profile assist in marketing practices (from the type of campaign you formulate to which channel of social media you exploit) it should also be instrumental in product/service design and delivery. Everything you do should be geared toward your typical user, so you do not deliver the product or service that you want to deliver or deliver the product or service that is required by your target market.
#11 Letting fear rule
One of the greatest pitfalls when starting a business is the fear that can envelope you. This fear paralyses and prevents small businesses from taking the steps they need to take in order to grow. Inevitably a degree of trepidation is normal, and an aversion to risk is also understandable, but the fact of the matter is starting a business is inherently risky – if you wanted to take the safe option you would remain an employee somewhere.
The problem with fear is that it can begin to override every decision you must make, and if you are constantly afraid of what the results will be, it will be extremely difficult to grow the business.
You may find a comfort level very quickly which may sustain you for a while, and indeed you may be happy with those results, but it will be mightily difficult to grow into a successful business is you do everything with the handbrake on. Coaching is a fantastic antidote to such mental apprehension, as most successful companies have taken a leap of faith at some juncture in their journey.
Final Thoughts about the Mistakes to Avoid When Starting up a Business
Mistakes are easy to make no matter what happens. Starting a business or a startup from scratch is definitely not easy and it will overwhelm you sometimes. However, understanding these mistakes will bring you closer to the whole process and it will allow you to see mistakes and fix them before they can make an impact on your new business.
A lot of people don’t build their own business because they believe you need to be rich to do so. It might be true for certain companies but definitely not for all. Indeed, with Internet it’s now possible to start up a business with little capital. Don’t you believe me? That’s totally fine and this is why we created a guide on how to build your own business with less than $1,000.
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