Starting a business of your own can be the most exhausting, exciting and exhilarating thing you’ll ever do. For committed entrepreneurs, a business is like a baby. It’s something you commit to 100% and find yourself dedicating all of your emotional energy and resources into making it work.
Up to 90% of new businesses fail within the first five years, but this is rarely down to lack of trying. All new businesses think they have what it takes to succeed, and a lack of hard work or dedication is rarely the thing that kills a business off. In the dog-eat-dog, hyper-competitive world of modern business, failure always comes down to a lack of knowledge or resources.
There are a number of woefully common mistakes that entrepreneurs make in the early stages which set them up for total failure. If you don’t know what to avoid, your business could be next on the chopping block.
Here are the eight most common mistakes people make when starting a business.
Only Preparing for Success
Entrepreneurs are a funny breed. What makes them so great is their utter conviction and confidence in their ideas. The fact that entrepreneurs assume success is actually a vital part of making it in the world, but hubris can and will result in their downfall.
When setting up your new startup, your strategy is likely to be centered around successes, such as when exactly you plan to meet certain sales targets or what to do when you’ve outgrown your venue. In the choppy waters of business, however, not planning for failure is fatal. Expect setbacks and problems, and budget for them accordingly.
Not Getting the Right People
Research has shown that one of the costliest errors that new businesses make is the failure to recruit the right people. If you just want to get off the ground and therefore speed through the recruitment process, the impact of inexperience, poor morale and workplace conflict can be devastating.
If you can, make use of recruitment agencies or headhunters in order to find the talent you need to grow your business from day one. Hiring and firing is an expensive and time-consuming process that can destroy your budget, so you need to make sure you get it right first time.
Not Shopping Around Beforehand
In the mad dash to get your business all up and running, you’ll be prone to accepting the first options that fit the bill. This is a common mistake which leads to business owners grossly overpaying in rent, utility bills, stock and third-party service providers.
One key example is electricity, a vital necessity which can cost many thousands of dollars a year. Fuel costs for businesses can vary massively across the market, so investing serious time shopping around can save you huge amounts of money. It’s a good idea to consult price comparison platforms like Business Electricity Prices before making any decisions regarding operations, so that you can cut costs on utilities and use the money you’ve saved to invest in your company’s future instead.
Neglecting Marketing
Marketing, when done right, requires significant amounts of manpower and capital. This is why many businesses may be tempted to skip this stage, assuming a “built it and they will come” attitude to their customers. This is fundamentally wrong for so many reasons.
In fact, experts at WebStrategies suggest investing a full 10-20% of gross revenue into marketing practices. This risk you run by skimping on marketing is that your business will be drowned out by the competition, and customers will simply be unable or uninterested in finding you. Consider hiring a digital marketing agency before building up your own in-house team.
Undervaluing Products
Whether through a lack of confidence or a desire to attract as many customers as possible, new businesses frequently underprice their own products and services, to the point where any chance of profitability is destroyed.
People are often willing to pay a lot more than you think they will, so charging bargain basement prices for high-quality products isn’t going to affect anything but your profit margins. Conduct plenty of thorough market research before going live, in order to understand the kind of pricing you should be aiming for. If you have invested in quality, charge quality prices.
Fearing New Technology
Many business owners think that technology doesn’t apply to them if they’re operating beyond the strict confines of the tech sector. Wrong. Whether you’re running a restaurant or a construction company, you’ll need to be on top of all of the latest technology in order to beat the competition.
This can be as simple as getting to grips with standard platforms like Google Analytics to see how you’re performing online, or it can be as advanced as integrating location-based targeted advertising or AI into your workflow. If you think a certain technology would help your business, chances are the competition is already using it. Don’t let them have the upper hand.
Going at It Alone
Entrepreneurs tend to eat, breathe, and sleep their business. While this is a good thing for you, it can mean that you might have an inability to trust others to help you succeed. Starting a business solo is a fruitless endeavor.
The financial, legal and logistical considerations alone are often impossible for one person to properly stay on top of. You’ll also suffer if you don’t have colleagues to bounce your ideas off of or to listen to if they have ideas of their own. When it comes to success, you really can’t have too many brains in the room.
Ignoring the Legal Side
No matter what trade you’re in, there will be paperwork. There will also be serious considerations regarding copyright, tax, consumer data, and payroll. These are all legal necessities, no niceties. If you fail to properly comprehend and adhere to them, the fines and restrictions the government could place on you can easily wipe you out.
If you’re going to take just one piece of advice from this article it should be this; hire an attorney before launching your business. The legal minefield of modern business is too fraught to approach without professional help.
All businesses have an equal chance of success. It’s how you prepare which makes all the difference.
