For many, entrepreneurship is synonymous with fear and uncertainty. Taking the leap toward starting your own business can present many challenges. Yet despite these challenges, the rewards of leading your business to success are numerous. Many small businesses fail due to mistakes that could have easily been avoided. In order to become a successful entrepreneur, avoid the following ten common mistakes.
1. Poor Financial Planning
Before starting your business, consider the type of business you will form such as an LLP or an S Corporation. Also consider the funding needed to start your business. If you are applying for a loan, create a financial roadmap of expenses and expected revenue to show the bank. Also, take into account your own personal financial liability. Separating your personal assets from that of your business is crucial in the event that your business does not succeed. Be realistic and conservative with your numbers in order to create a strong financial base for your business.
2. Ignoring your Market
While sales are important to the survival of any business, you don’t need to push your business on everyone you meet, such as all of your friends and family. Furthermore, it’s a waste of time to try selling to people who simply don’t need what you’re offering. Therefore, do not expect to sell your product or service to everyone. Research your potential market and act accordingly. Ask yourself, what age group am I trying to reach? What type of person would use this service or product? Advertise and market your product or service within your tailored market to ensure success and avoid unnecessary spending.
3. Lacking Clear Goals or a Mission Statement
Create a plan that you and the other members of your business can both understand and work toward. Set monthly or quarterly goals in order to push your business to succeed. Fuzzy goals and a lack of motivation create decreased productivity. Forward progress is crucial for every business, especially for small business start ups. Look toward the future and put in place steps in order to get there.
4. Focusing on Perfection
Yes, perfection should always be a goal however it is usually not achievable one-hundred percent of the time. Prioritize the activities of your business and act accordingly. Do not spend three hours working on a monthly newsletter when other deadlines are looming. Teach yourself to address your tasks efficiently and recognize when it is time to move on.
5. Poor Hiring
Remember to consider want versus need when hiring. Of course we all want to hire certain people due to their bubbly personality or because they are our friend. However, ask yourself if this is the only reason that person is being considered for the position. A business does not double for a social club. Yes, we all want to get along with our colleagues. However, a candidate’s personality or personal friendships should not be the only criteria used when making hiring decisions. Hire individuals you need in order to make your business more efficient and successful.
6. Ignoring the Competition
Although your product or service may be novel, there is a high probability that a similar version is already on the market. Make sure your business can compete with its competitors. Research the prices, advertising schemes and promotions of these businesses. Use this information to create and strengthen your business plan. Ask yourself: are your prices too high or too low? Are you both advertising in the same places? Use your competitors to learn the tricks of your trade.
7. Putting All Your Eggs in One Basket
Would your business fail if you lost one client? Businesses often find themselves tied to a single account which can often lead to a failed business. Spread your product or service as widely as possible. If your product is only intended to be used once, brainstorm ways to stir up repeat business. Think of ways to incentivize your customers to refer you to their friends and family. Do not invest all of your time and energy, and also the success of your business, into one account or customer.
8. Inconsistent Service
Respond to e-mails, voicemails and business proposals promptly. The quicker you respond the more professional and responsive you will appear. Take into account the volume of work your business might receive. Are you capable of taking large orders while still responding to other customers? Customer service should always be a top priority. Remember: if you do not provide customers with the service they expect, the will probably go somewhere else.
9. Marketing Mistakes
Marketing is extremely important to any business. When creating a marketing strategy, do not immediately purchase business cards and other advertising until you know what works. Consider your target audience, your mission statement, and your budget before creating a market strategy. Also utilize social networking sites such as Facebook.com and Twitter.com to reach your audience. Finally, spend time creating your website. A home-made website will not communicate professionalism causing potential customers to go elsewhere.
10. Not Knowing When to Let Go
This principle applies both to successful and unsuccessful businesses. In the unfortunate scenario where a business fails, it is often difficult for the owners to consider dissolution. Although the solution is not ideal, putting money into a sinking ship does not benefit anyone. This also applies to thriving businesses. Often as the business changes, so do the relationships between the business and its owners. Know when to step aside for the good of the company.
Starting a successful business takes preparation, research, market knowledge and often a bit of good luck. It takes significant effort to build a successful business, but it’s also a tremendous growth experience. Avoiding these ten common mistakes can make the road toward success much easier to travel. Start your journey toward becoming an entrepreneur HERE!