6 Common Mistakes Entrepreneurs Make
I’ve been around entrepreneurship my entire professional life. I’ve seen great success in all manner of industries – but more importantly, I’ve seen a lot of businesses struggle and even fail.
For this reason, I’ve put together this list to act as a check so that you can avoid making the same mistakes that many other businesses have.
Mistake 1: The business doesn’t start with the end in mind.
From day one, you need some sort of a plan. It doesn’t have to be complicated, it doesn’t have to be long and detailed and it doesn’t even have to be permanent. What it does need to do is exist. You can change it as much as you want later, but initially, how you want to end says a lot about how to plan your direction.
Do you want to sell the business? Then you need to keep close track of all of your financial documents and filings from day one. Do you want to pass on the business to a family member? Then you’re going to want to get that family member involved as soon as possible to foster familiarity. Do you want this to be temporary or long term? This will influence how you conduct your day to day operations. All of these factors need to be considered when putting together your plan.
Mistake 2: New businesses don’t make clear WHY they do what they do.
So why did you decide to start your company? There are an almost infinite amount of reasons to start a business. Whereas some are better than others, it’s still important to know at the core why you’re deciding to do this. Do you think that you can improve upon a product or system? Do you genuinely think that there is a market or space that you can occupy that isn’t already occupied? Or if it is, is your concept disruptive enough to carve out your own space?
Even a distaste for a former employer can be a good reason to start your own business – and many people have started businesses for just this reason – only make sure that you are able to answer the above questions so you don’t dig yourself into a hole you can’t get out of.
Mistake 3: The business either has no plan or its plan is too rigid.
Without a basic roadmap, you will have no way to gauge your progress. Are you accomplishing your goals in a timely manner? Should you be pushing harder or are you already pushing too fast?
Along with this plan comes a budget. A budget allows you to set up your expected spending and then you can assess if it’s too little, too much or just right.
The real benefit to both of these concepts is that you can review your actual performance against your goals. It also helps you to see what you can and can’t eliminate in order to be more efficient. One of the biggest and most important reasons to have and stick to a budget is that if you ever wish to sell your company, you will need every single piece of your financial background to show.
These are three of the more basic mistakes that many entrepreneurs make. Don’t let yourself get bogged down in minutiae, but make sure that you do your due diligence in keeping your books, making a plan and sticking to it. Hopefully, we can all learn from these common mistakes.
Stay tuned for part 2 of this list to come out soon!
Have you had to learn any lessons the hard way? Leave a comment below and let us know about your own successes and failures.