Introduction
What are some of the common mistakes entrepreneurs make when starting out? Here is a list of ten of the most common mistakes new entrepreneurs make when starting their business. Although the mistakes we make can be our best teacher, they can be time consuming and costly. So here I want to share with you my hard-earned experiences and insights I gained from my own mistakes in business judgment.
Mistake #1. Starting without a business plan
If you are serious about the success of your new business, you must have a plan in writing. It can be as simple as one page to get started. Writing it down will force you to think about how you plan to make your business come alive and also profitable. Force yourself to honestly answer questions like “Who will my customers be?”; “Why are they going to buy me?”; “How much will I charge for my products and services?”; “How will I get the word out about my new business?” Be realistic about the costs of running your business. Your business plan will act as an ever-changing and improving guide for you to follow.
Mistake #2. Have no managerial experience
As the founder of a small business, you will be directly responsible for all aspects of management: finance, marketing, sales, employee relations, dealing with subcontractors, and restroom cleaning, etc. But if you’re starting your business because you’re excellent in your particular skill or service, and you want to spend all your time and energy doing this, perhaps a family member or partner can handle most of the running of the business. . This person should share his vision and goals for the business.
Mistake#3. Hiring help too early
Do not hire employees until absolutely necessary. The expense of hiring help can financially drain your small business very quickly. When you hire someone, make sure they are hardworking and honest. Only hire the people you really need, that will have a positive impact on your business. At our small home-based business, we try to use subcontractors as much as possible.
Mistake #4. Not hiring professional help
Do not skimp on hiring professional advisors such as an accountant and a lawyer. Interview several and find advisers you feel comfortable talking to. Do they understand what you are trying to achieve? Are they quick to share their experiences and knowledge with you? These professionals can save you a lot of headaches and a lot of money.
Mistake#5. Not using the cash method of accounting
Under the “cash method,” you record business income when it is received in your bank account. And it records an expense when it is paid from your bank account. Most of us use this cash method for our personal finances because it is much simpler and less time consuming. This is also the ideal method for home and small businesses. Under the “accrual method,” you would record business income when it is earned, regardless of when you are paid for the product or service you sold. And you record an expense when it’s incurred, regardless of when you’ll write a check to pay it. This accrual method is too difficult for a small, home-based business to follow.
Mistake#6. Not tracking your money
You should keep track of your income and expenses every month so you know where your money is going. You can do it yourself with inexpensive accounting software or simply download your monthly statement from your bank and credit card. Cash flow is the life blood of a small startup business.
Mistake#7. Not doing enough market research
This is a very common problem with start-ups. Market research can take many months and a lot of research to do correctly. You must know who your competition is and who your customers will be. You need to understand all aspects of your industry, inside and out. Read all the books and articles you can find on your particular type of business. Talk to others who are in that industry.
Mistake #8. Not doing the right marketing
Every business should have an online presence. No matter what business you are in, you have to be online. It is now possible to do extensive and sophisticated marketing at no cost. Whether it’s a simple website, Facebook, LinkedIn, Tumblr, or an online phone book listing, it needs to be online.
Mistake#9. Spending too much too soon
If you’re on a tight budget, don’t start by spending thousands on business cards and letterhead. Don’t spend thousands paying a company to build your website when you can build a great website on your own very quickly. Keep using that old computer until you have the cash flow and real need for a new computer. Before making major purchases, like a new truck or machine, get advice from your accountant.
Mistake#10. Giving up too soon
An important part of being an entrepreneur is having stamina, drive, and determination. Not giving up on your dream because of a few bumps in the road is an essential part of entrepreneurship. Building gut strength to weather tough times is essential if you are ever to achieve any kind of success. Don’t believe anyone who tells you that starting and running a business is easy or simple. It also takes time, effort, faith, and a vision.
Conclusion
Feel free to ignore this advice entirely, or listen to it and keep it in mind as you start your new business. But don’t let the fear of making mistakes, costly or otherwise, stop you from starting your new business. Making mistakes and understanding why you made them, and learning how to correct or avoid them in the future, will truly be your best teacher. And it wouldn’t hurt if you started a relationship with an experienced accountant and lawyer that you could turn to for help.