Congratulations! If you’re reading this, it probably means you’re one of the brave souls who’s either just starting a business or is seriously thinking about it. Being an entrepreneur isn’t for the faint of heart, and if done incorrectly, you’re more likely to fall on your face than get ahead in business. Let’s spend some time looking at six common mistakes that entrepreneurs make when starting a business (so you can avoid them).
You Didn’t Make a Business Plan
When it comes to starting a business, it’s so easy to think about the “how” before thinking about the “what.” If someone sets out to start a multimillion-dollar comic book press, they might initially think that the first step is creating a comic book. This is an example of a “how,” which is also known as a tactic. They’re thinking about all the stuff they’re going to do before considering the bigger picture of their business.
Before you think about your tactics – or heaven forbid – implement them, you should start with the “what,” of your business, which is also known as a strategy. And a good place for that is with a handy business plan. You can check out a free one here.
This is where you decide what your business is. A business plan is the foundation of everything you do. During this exercise, you’ll dive into the vision of your company and the management style. It may seem a little cumbersome, but this step is essential for anyone who wants their small business to take off.
You Invested Before You Tested
For some people – and I’ll lump myself into this category – it’s incredibly tempting to jump at every new business idea or venture. Whenever we catch wind of a new opportunity, we whip out our checkbook and beg whoever’s nearest to take our money. You’ll need to rein in these impulses when starting a business.
I highly recommend that you start by reading Eric Ries book, “The Lean Startup,” which details ways that you can spend a little, test out the market and then adjust your spending according to your learnings. Whatever you do, don’t try to eat the elephant in one bite! Small, carefully calculated bites are the best way for you to get your business off the ground.
You Spent too Much Time Planning
While some people have a tendency to act without proper planning, others have the opposite issue –they spend their time dreaming and drawing graphs, but they never take action. The consequences of this mistake are obvious, but many people stay in these planning stages for long periods of time (sometimes indefinitely!). There are a couple of ways to fight this urge. You should first set short-term goals for your business. If you want to start an Internet business that sells strawberry jams, start by making a business plan and create a timetable for when you expect steps to happen. Make a detailed schedule of when you’ll have your website up and even when you expect to make your first strawberry jam sale.
The next way to fight this behavior complements the first. Get a business partner. If you’re known for dragging your feet, find someone who can’t sit still. Look for a business buddy that complements your weaknesses.
You Hired Someone You Couldn’t Fire
Speaking of business partners, be extremely careful about the people you bring into your business. It’s difficult to get rid of someone who’s invested in the company, so make sure you know them well before moving forward. And just because they’ve been your BFF since high school doesn’t make them quality business material. When putting together a business form, draft rules about your business relationship. If one of you breaks the rules, there can be an appropriate consequence. You’ll likely need to bring a lawyer into these talks.
The same advice is true for the employees that you hire. Be wary of “taking a chance” on a niece or nephew or the neighbor’s kid who still lives in the basement. If you have any doubts, stay clear of family members or friends working for you. Poor employees can be the leak in your sinking ship.
You Decided to Work Harder Instead of Smarter
Technology should be your friend when it comes to starting a business. Even if you’re making a physical product to sell on your website, always be on the lookout for more efficient ways of getting things done. For example, email marketing services can be the difference of you succeeding in your area of business or not. If your products or service requires any kind of interaction, you may have to answer a lot of phones. Don’t be your own secretary! Instead, consider finding an online answering service to outsource your phone calls.
Some people push back against this advice, saying that they don’t want to spend money on these products and services. If you fall into that category, stop what you’re doing right now and go read Tim Ferriss’ book “The 4-Hour Workweek.” As Ferriss explains, we need to quit pretending that our time isn’t a resource, and is just as important as money (if not more so).
You Tried to Be Good at Everything
Of all the pitfalls that entrepreneurs experience, this can be the most dangerous. Here’s an unfortunate reality: You’re not going to ever be good at everything. Sure, you may have several talents, but you also have weaknesses. For example, let’s say you’re excellent at Internet marketing and you have an eye for analytics. But, in spite of all this, you’re an ineffective communicator. Instead of investing all of your time and resources to be a better communicator, consider hiring someone to communicate for you. You can hire incredibly talented communicators through the freelance site Upwork, many of whom cost about the same as a babysitter.
Should you still try and be a better communicator? Probably. But don’t neglect your talents while you pursue mediocracy in other areas. Be good at what you’re good at, and then hire people who can make up for your weaknesses.
There’s no use sugarcoating it, starting a business is rough. If you want to be a successful entrepreneur, you’ll need to start with a solid foundation. Take these warnings to heart and give your business legs to on which to stand.
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