No budding entrepreneur wants to put blood, sweat, and tears into a new business venture only to see it fold in less than a year. Yet even with great ideas and adequate effort, most startup businesses fail in the first year.
The following is a list of the most common mistakes you need to try (at all costs) to avoid.
1. Focusing on passion instead of skill
A common refrain in business is to “do what you love,” yet this needs to be balanced out with a hefty dose of reality. You may love gourmet food, but you wouldn’t expect to succeed as a chef without the proper training. Work towards building your skill set to allow yourself to do what you love. This way, you’ll also be doing what you’re good at. Never, ever start a new business (with you as the central figure) unless you are way, and I mean way better at what you do than your competitors. Otherwise you’re dead in the water before you dip your toe in it!
2. Using a derivative idea
Whenever a new business achieves success, a crop of imitators instantly pops up around it. These rarely do as well as the originator, but they do create “noise” in the marketplace. The best business ideas are ones that provide a clear and distinct solution to a problem, rather than piggybacking on one that’s already solved.
3. Not having a specific ‘user’ in mind
Research is essential for success, no matter how large or small your business might be. You can’t create the right product for your ‘user’ if you don’t know who he or she is. Defining your target user allows you to refine your products, services, and marketing efforts to enhance profits. We have the Dr’s Demographic Descriptors and the Corporate Criteria Classifications to systemise an otherwise ‘ad hoc’ approach.
4. Not paying attention to the competition
Although you don’t want to consciously copy your competition, you also don’t want to ignore them. Is your competition out-selling you due to lower prices or a premium product or service?Antimimeticisomorphism is the key element to you standing out and above the competition. Not many people succeed doing this because it requires a substantial mindshift.
5. Trying to take on too much on your own
With the wealth of online resources available, it’s easier than ever to launch your own business from the comfort of your kitchen table, hone office or garage. Yet at the same time, if you want your business to grow and thrive, you must realize your “Peter Principle” – everyone has one. We cover this concept in our 1 Day Mini MBA Program. You can’t be good at everything – the sooner you learn and accept that, the better. There are only so many hours in a day, and some jobs require the eye of a professional. Get as much help as you can right from the start, for example hiring an accountant or bookkeeper if necessary.
6. Hiring too many people
On the other hand, hiring a full team before you’ve hit the ground running can rapidly deplete your initial fundraising efforts. If you need to hire a team before you’ve started turning profits, consider paying with equity rather than a salary. Also consider hiring contractors – we show businesses how to do this using web-based portals. Contact us for further details.
7. Not creating a budget
Creating a solid business plan is an important preliminary step for new businesses. It’s best to set a realistic, efficient budget that minimises your operating costs from day one. To assist with this, you may want to bring in a cost accountant who is qualified to help manage costs more efficiently. Click here for more information about what cost accountants do and start thinking about cultivating your own cost accounting skill set.
8. Avoiding online marketing
Let’s face it – if you’re not Internet savvy – stick to your day job. You are an entrepreneurial dinosaur. You cannot survive in business today without the Internet. Simple as that. Sorry. The world has changed. No one is searching in book with yellow pages anymore.
9. Relying too heavily on outside opinion
Asking for opinions from those around you can help you see your business from a pair of fresh eyes and lead to new innovations and improvement, but you wouldn’t ask your car mechanic to cut your hair, so remember to take UNQUALIFIED advice with a grain of salt, even if it’s being given by a professional. Each profession has its purpose and role mixing these up can be catastrophic.
10. Forgetting to take breaks and recharging your batteries
Running a new business is a full-time job and then some. Don’t forget to enjoy the hard work and take a break every now and again. Your best business ideas will come to you when you’re jogging through the park or fishing with friends on the weekend. You need the time off to “sharpen the saw” that is your mind and entrepreneurial spirit.
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