6 Mistakes First-Time Entrepreneurs Make and How to Avoid Them
At the heart of every industry, there are ambitious entrepreneurs and small businesses.
When starting a business, you don’t just create something unique, you also contribute to the well-being of a country by creating new jobs.
Generally, people who decide to become entrepreneurs feel more motivated and fulfilled to work. However, entrepreneurship comes with certain risks.
Some of the biggest concerns first-time entrepreneurs face include funding issues, staffing, and success rates.
Because of these concerns, many people feel afraid of starting their own businesses. They are afraid to fail and don’t want all of their savings to go to waste.
What Every Entrepreneur Should Know in 2020
There are plenty of reasons you should want to become an entrepreneur.
Entrepreneurship comes with financial stability and freedom. You also get to be your own boss and make your own schedule.
Regardless of your reasons, if you are an aspiring entrepreneur who is still hesitant, we have some good news for ya. According to the stats, only 22.5% of businesses are closing within the first year.
This sounds pretty encouraging, right?
Here are some of the most inspiring stats you should know before launching a business:
- There are over 500 million entrepreneurs around the world.
- If 22.5% of businesses fail, it also means that the 77.5% survive their first year and evolve.
- 62% of American millionaires are self-made.
- The top reason that causes new businesses to fail is the lack of market demand.
If stats are so promising, then why are there still some entrepreneurs who fail?
Unfortunately, the biggest trigger of failure is a lack of preparation.
In this article, we are going to tell you everything you need to know to prevent first-time entrepreneurial mistakes.
1. Hoping To “Break The Ceiling” In No Time
Many people who start their first business hope to get rich in a short time. They ignore the risks, potential issues, and have a strong belief that their business is bound to succeed.
There is nothing wrong with believing in your business. After all, such a positive attitude keeps you moving forward.
However, many aspiring entrepreneurs have the wrong idea of success. They want to break the ceiling and get rich fast. Unfortunately, overnight success is almost impossible unless you have sufficient capital from the very beginning.
How can this belief hurt you? While it is generally good to believe in yourself, believing in quick results can make you feel disappointed and discouraged if you face a failure. Having unrealistic expectations unmet, you risk not seeing the full potential of your business.
Solution: Understand that overnight success is possible but not guaranteed. It takes time, hard work, dedication, and a bit of luck to become successful.
To avoid disappointment, be sure to assess your business’ potential objectively.
Also, be willing to put time, effort, and whatever else it takes to keep your business running.
Eventually, with wise planning and some luck, your effort can pay off within a few years.
2. Not Planning
Planning is the basis of success in the modern business landscape. Today, the market is increasingly competitive, complex, and dynamic. The trends and rules of the game are constantly changing. Thus, to survive the competition and win, you have to plan every step in advance.
That’s where many beginners make a mistake. They get an idea (even a brilliant one) and they just take it from there, without any planning. It is easy to predict where such an approach will take them.
Here is something to keep in mind – a bare idea will not take you far. Also, relying on competitors’ experiences will likely not work out either. In a constantly-changing environment, planning lays at the core of business success.
Even if you get lucky and win purely on a bare idea (which is uncommon), looking back at the beginning of your path you will likely realize how much time, effort, and money you could’ve saved if you had a solid strategy.
Solution: To move your business forward, start with an idea, set the right goals – clear, time-bound, and measurable. Outline the steps you need to take to reach your goals.
3. Create Thriving Company Culture
Here is one thing some aspiring entrepreneurs may not realize – every business has a culture. In a nutshell, the corporate culture is a set of things that are considered important to the company.
This includes rules, behaviors, and shared values that all help establish the right hierarchy inside the business and ensure that all employees are moving in the same direction.
The corporate culture is what helps to connect the dots between all links in the company. One of the biggest mistakes you can make is letting different personas set the culture of the company.
Solution: Keep the company culture at the core of the business. From the early stage of your business, start shaping shared values deliberately. Here are a few things you can do to get started:
- Make a list of your core beliefs that you want other employees to share.
- Discuss these values with other co-founders (if any) to make sure that you are on the same page.
- Think of what behaviors are acceptable in your company and which aren’t.
- Create a set of corporate rules that you want your employees to follow.
- Find ways to make the rules and values available for everyone in the team. Some companies offer awards to employees who share corporate values. For example, if you value teamwork and someone shows himself as an excellent team player – reward them for that.
4. Not Defining Target Audience At The Early Stage
Depending on the chosen niche, you will have a specific audience to which your goods or services will apply to the most. The earlier you realize this and define who your target customer is, the faster your business will start growing.
Let us give you a quick example here. Let’s say you are a recent college grad, and you decide to create a company to help other students succeed in college. What do you think will happen if you target someone else besides college students? In this case, your marketing strategy will be ineffective. Your advertisement may reach millions of people, but this won’t bring any results if these people are not interested in your offer at all.
With that being said, we can conclude that speaking to everyone pretty much equals to talking to the wrong audience.
Solution: Instead of relying on a lucky guess, invest time and effort in determining your target audience as early as possible. Think of your products or services and ask the following questions:
- Who can be interested in my offer?
- Are my goods relevant to people in a specific area?
- What are the age categories likely to purchase from me?
- What are the key habits, interests, behavioral patterns, and issues my potential customers have?
The more accurate and careful you are targeting your prospects, you will have more chances to get noticed.
5. Putting Off The Start Of Sales
Often, young entrepreneurs spend too much time and effort on perfecting their product, thus, procrastinating the start of sales.
Solution: Cut down on the pre-sale process. Start to engage with prospects sooner. Get in the habit of promoting your services or products way before the actual launch. This will help you save time and ensure that by the time of the launch, you will already have some interested customers.
6. Not Letting Team Members Go When It’s Time
Entrepreneurs should be ready to fire people, and many specialists confirm that it is one of the hardest things in business.
Firing someone often feels like you are letting a person down. This feeling often gets in the way of inexperienced entrepreneurs. They feel guilty for letting employees go, even if the decision is justified.
Solution: To grow, you gotta let people go. Don’t wait too long to say goodbye to your employees who do not add value to your business. Here are the three key indicators that should let you know if it’s time to let someone go:
- A particular employee is disruptive to the company. Lack of discipline, decisions, and actions negatively affect the atmosphere, culture, or productivity in the workplace.
- A person can’t do the job. Either due to the lack of skills, knowledge, and experience or due to other reasons.
- An employee takes too much effort to manage.
Now that you know the fundamental reasons, be sure to assess the efficiency of your staff objectively. Don’t wait too long to fire someone out of optimism, relationships, or hope that things will get better.
Unfortunately, even with experience and time, firing employees isn’t an easy task. To ensure the success of your business, stay on top of your hiring process.
The Bottom Line
Needless to say that running your own business is hard and time-consuming. It takes passion, persistence, and hard work to generate a worthy idea and then turn it to life.
As a first-time entrepreneur, you will probably face lots of ups and downs, and that’s natural. Don’t let failures stop you and always keep moving forward to your goals.
Hopefully, this article helped you learn about some of the biggest common mistakes made by aspiring entrepreneurs. Being aware of these mistakes and the solutions that work well for them should help you prevent or overcome any issues easier. So keep your head up, follow our tips, and you will succeed.