If you’re just getting started in entrepreneurship, it may feel like there are hundreds of things to learn.
What goes into being a new entrepreneur? The most successful entrepreneurs have been through the process and know what it takes to go from 0 to 1 (startup to business). Founders of profitable startups will always tell you that they wished they had more resources and guidance when starting out.
Starting a business can be exciting but it can also be scary. You are your business. While no one is perfect, some people make mistakes that could have easily been avoided.
When you make mistakes, it’s usually at the expense of time. This means you lose potential customers or clients, or maybe wasted money due to an unnecessary hire or project failure. A part of this process involves avoiding mistakes that new entrepreneurs commonly make.
Here are the most common pitfalls that new entrepreneurs and businesses are prone to make, along with ways to avoid them. These valuable insights will help you avoid making inadvertent mistakes that could block your path to success.
Spending too little or too much money
You are likely to be concerned about money when you’re a new entrepreneur. Cash flow before launch is usually close to zero, so making and saving money takes precedence over everything else.
New entrepreneurs tend to have two common mindsets. While one group believes “You need to spend money to make money;” another set think it’s best to spend as little as possible until they could generate decent cash flow.
The problem is that when taken to extremes, both of these orientations can be harmful. You should spend startup capital wisely, but don’t be afraid of investing in quality products and good people. You will benefit from this in the long run.
Thinking you don’t have direct competitors
As a result of the excitement surrounding a new product or business, new entrepreneurs may falsely believe that they have no direct competitors or that their product is so superior to their rivals that they belong to a category all their own.
A business with no direct competitors is extremely rare. In most cases, someone already has a market share in your niche – unless you have invented a completely novel product or software. Get to know this business or businesses and how your business can differentiate itself.
Hiring on the basis of cost
There’s a temptation to cut corners on new hiring when funds are tight. This strategy, however, is costly over the long run.
Usually, low-cost employees or consultants are cheap for a reason — they’re either inexperienced, unskilled, and/or unreliable (or all three).
Setting unattainable goals
An entrepreneur can become so caught up in his “big idea” that he doesn’t create a blueprint. However, to be successful you must first set realistic and attainable goals.
Be sure to set specific long- and short-term goals. Set a reasonable target, rather than just saying, “My goal is to make N10 million profit this year.” Instead, figure out what steps you need to take in order to reach your goal.
A common assumption (sometimes conscious, sometimes not) among new entrepreneurs is “If you build it, they will come.”. They conclude that free PR and word of mouth are the only ways to market their revolutionary products.
Almost all startups must invest heavily in marketing. Usually, this includes SEO, PR, content marketing, and paid advertising. Analyze where your competitors are spending their marketing funds and find out how you can compete.
Having too narrow margins
Your success will be largely determined by the profit margin you have. You will have a very difficult time raising the price in the future if you set it too low now – your customers will frown at it when you have to raise it.
You should analyze your production and operations costs to determine how much flexibility you have. Is there a way to reduce these costs in the future? If not, increase the profit margin now to cover these costs.
Assuming you can handle everything on your own
When you first start a job, it’s common to think no one will be able to do it as well as you. As the sole person with the real passion to make your business succeed, you are the one who knows your products inside out.
Not only does this lead to burnout, but it can also seriously hinder your success. The expertise and experience of a consultant or mentor can provide a much-needed independent viewpoint for your business.
Letting fear of the unknown limit you
New businesses can be daunting and aren’t for the faint-hearted. Although it is understandable to be afraid of rejection and failure, allowing these fears to hold you back can significantly impede your progress.
The first step to managing your fears is recognizing that others have also been there before.
Prioritizing your product over people
To build a successful product and business model, you must focus on your customers. The problem is that many new entrepreneurs are so concerned with profit-making – understandably so – that they forget that the most important aspect of running a sustainable business is making sure that their customers are satisfied and loyal over the long term.
The process of becoming an entrepreneur isn’t easy, and mistakes will inevitably happen. However, that does not mean you have to repeat everyone else’s!