Starting a new business can be a daunting experience for entrepreneurs just starting out. As a business owner, you are bound to make a few mistakes when first starting your business, but you should not let them deter you from moving forward. The most common mistakes are the easiest to fix, and once you educate yourself on what not to do, you’ll have a better understanding of what to do and how to approach running your business more effectively.
Here are nine of the most common mistakes new business owners make when they are first starting out.
1. Spending Too Much Money or Not Spending Enough Money
In general, money is the main concern for new business owners and entrepreneurs. Unless you are well off in the financial area, it’s likely you have little to no money to work with when beginning your business. How to make the money needed and then saving it to build your business should be your top priority.
We are often told that to make money we must spend money. While this is true sometimes, it should not be your only way of thinking. Sure, you could also spend just the bare minimum until you start to see cash flow, but either of these options could prove to be fatal to your business in the long run.
The smartest step you can take is to spend your money on high-quality products, invest in good people, and do not take the cheapest way out. Spending your startup money wisely can prove to be much more beneficial to you and your business. In this case, the old saying still holds true, you get what you pay for. If you pay for cheap products, you get cheap products. If you invest your money in unreliable people, you will get just that. So be sure to spend your startup cash wisely, even if it means buying something that is a little more expensive than you had originally wanted.
2. Thinking you Have No Direct Competition
Another huge mistake new business owners make is in thinking that they have no direct competition in their specific market because their product or service is the holy grail. This way of thinking is simply not true, and to think that it is can cause you all sorts of problems in the future with your business.
In the marketplace, there will always be competition among entrepreneurs. The only way that there can be no direct competition is is your product or service is one of a kind or a brand new invention. Unless that is the case, you can be assured that someone, somewhere has a market share in the same niche as you do. The wisest action to take is to do your research on such companies and their products or services, then evaluate how you can make yours better and different from theirs.
3. Making Hiring Decisions Based on Costs
This mistake can easily be listed under the first one, but we felt we should mention it separately because of its importance to your business. Your business might be the greatest thing since white bread, but your business is nothing without its employees. Understandably, if you do not have a lot of capital to start with, you may want to use the cheapest method of hiring employees. This method may save you money, but it’s likely to blow up in your face down the road. Quality employees are hard to find when you are tempted to skimp on the funding needed to find them.
Low-cost employees or consultants are easy to find, but there are reasons they are so low cost including inexperience, no skills, or they are unreliable. All three of these are not something you want when starting your business. High-quality employees with excellent skill sets, more experience, and reliability may cost you more, but in the end, their worth is what you need to turn a profit on your business and to give your business longevity. Keep in mind that many new businesses fail within the firsts five years they are open and you do not want to be just another statistic in the world of small businesses.
4. Setting Unrealistic Goals
The idea of opening a new business is so exciting to entrepreneurs, that they often set goals that are unattainable and they do not realize it. In reality, you must discipline yourself to set goals that you know are within your reach in order for your business to succeed.
To do so, make a list of goals you want to reach, both for short-term and long-term. When you make your list, be specific with your goals. For instance, you want to have x-number of clients a month from now, or the amount of money you want to make this week or next week. These are much more specific than saying “I need to make some money by next Friday for…” Make your goal reachable, attainable, specific, and then outline the steps as to how you plan to reach your goal, be specific with the steps you are willing to take as well.
5. Not Marketing
In this day and age, not thinking about marketing is a big no-no for any business owner, no matter the size of your business. Without marketing, the public is going to have no idea your product or service even exists, and to state the obvious, your business cannot succeed without some form of marketing.
Marketing your business, brand, product, and services can be done a number of ways including:
- digital marketing online
- traditional marketing
- SEO strategies
- Content marketing
- Paid advertising
- and more…
A good way of getting your marketing efforts off the ground is to search out your competitors and other businesses to see where their marketing efforts lie and how they are spending their money on marketing. Then ask yourself how to compete and differentiate your marketing efforts. Keep in mind that a good amount of your budget should be used for your marketing strategies.
6. Having Small Profit Margins
Having small profit margins can lead to your business being unsuccessful. A healthy profit margin will make life much easier for you, your business, and your customers. One thing you can guarantee is your customers will be less than thrilled if you have to raise your prices in the future, and by having a small profit margin this becomes inevitable.
On the other hand, if you have a healthier profit margin the need to increase your prices will be less likely. Start by reviewing your production and operating costs, see if there is any flexibility in their costs. Is it possible to reduce these costs in the future? If it isn’t then you should consider a higher profit margin now to cover their costs.
7. Thinking You Can Do Everything By Yourself
when you first start out, thinking that you are the only one that can do the job correctly is commonplace. After all, you know your products and services better than anyone else, right? In layman’s terms, this is a recipe for disaster that can eventually leave a bad taste in your mouth, and that’s not even including the fact that you will burn out sooner or later. Both options will do nothing to help your business succeed.
By finding yourself a mentor or consultant before taking it all on by yourself, there is a much better chance that your business will succeed. A knowledgeable mentor or consultant can give you their perspective, objectively, on your business and market which can help your business stick around for the long run.
8. Being Afraid of What If’s
The fact remains, starting a new business is scary. Don’t let anyone tell you any different. When you first start out, thoughts of failure or rejection will be niggling around in your mind. But letting yourself become so scared of failure or rejection is another recipe for disaster. Not only is it unhealthy for you, but it certainly doesn’t help your business or its customer base.
Be sure to recognize your fears and why you’re having them. Then take steps to overcome them. Do not let your fears stop you from doing what you love and helping others by offering them your products or services.
9. Put Your Product First and People Last
No matter how grand your product or service is, you must have a customer-first mentality. After all, these products or services you’ve created were made to help people solve a problem they may have. You didn’t create such a great product just for yourself, it was created to be shared with others. For many entrepreneurs, making money is the first thing on their mind, which is well and good, but in order to make money, you must have customers otherwise you’re just wasting your money on products that will just pile up in your garage.
The key to any profitable and sustainable business is to have a customer base. Customers buy the product, the product makes you money, customers are happy and satisfied, and more product sales make you more money. The formula is quite simple.
Being a new business owner is not an easy task, but it pays off in the long run especially if you can avoid mistakes often made by others, and not repeat them over and over.