Making mistakes is an unavoidable part of your entrepreneurial journey, but certain errors may prove fatal for your fledgling business. According to the USA Bureau of Labor Statistics, 20% of small businesses fail in the first year. Often, this is due to naivety or a lack of preparation. Let’s take a look at some of the most common and dangerous entrepreneurial mistakes so that you can avoid them and ensure that your business sticks around.
1. Failing to Get to Know Your Niche
When you’re full of ideas and enthusiasm, it’s tempting to skip the research step and dive straight into launching your business. However, the better you know your chosen industry, the more successful you will be. Take time to learn from your competition. Discover what it takes to succeed in your niche, and why others have failed. Understanding the industry will help you to position yourself appropriately in the market, predict trends and gain a competitive edge. Find out what works, what doesn’t and what you can do better. If you want to swim instead of sink, make sure you do your homework before diving in.
2. Ignoring Expert Advice
Gut instinct is part of entrepreneurship but that doesn’t mean you should ignore the advice of others. It always pays to listen to and learn from more experienced business people who can offer you valuable advice and insights. Being overly arrogant and thinking that you always know best is a sure fire way to tank your budding enterprise.
3. Cost-Based Hiring
Ever heard the phrase “pay peanuts, get monkeys”?
A company is only as good as its people. When you’re first starting out, it can be very tempting to find staff who are willing to work for low wages, but even one bad hire can be a very costly mistake for your business. If you’re starting a business with a tight budget, it’s natural to want to keep costs low but remember that bad hires reduce productivity, tank morale and require you to spend even more money on a replacement hire further down the line. Invest in quality staff from the beginning and you’ll reap the rewards.
4. Neglecting the Customer
Without customers or clients, you have no business to speak of. Ensure that you create all of your products and/or services with the customer in mind and create a customer-first philosophy to underpin your business. Repeat customers are your greatest source of revenue. Research by Invesp Consulting found that increasing customer retention by 5% boosts profits by a whopping 25-90% and acquiring a new customer is up to five times as expensive as retaining an existing one. It really does pay to put the customer first.
5. Setting Unrealistic Goals
It’s great to be ambitious, but it’s equally important to set achievable short-term goals to keep you motivated and maintain a sense of direction. Short-term goals are great benchmarks to measure your progress, as it can be more difficult to understand where you are in relation to a goal that’s months – or even years – away.
6. Neglecting Marketing
Unfortunately “build it and they will come” is not a good business philosophy. It’s essential that you invest in marketing for your start up. You can offer the greatest product or service in the world, but that doesn’t mean much if no-one knows about it. A good marketing strategy will help you to stand out from the crowd and be heard above the noise of your competitors. If you want to see healthy profits you have to invest in marketing.
7. Trying to Do Everything Yourself
Many entrepreneurs try to handle every aspect of their business by themselves. This is a mistake that not only leads to burnout, but also prevents you from completing tasks to the best of your ability. Knowing when to outsource and delegate certain tasks is key to your survival as an entrepreneur and the sooner you learn how to do it, the better. Outsourcing tasks such as admin, accounting and content creation will free up your time to concentrate on what matters most to you: growing your business.
Set Yourself Up for Success
Being aware of and avoiding the above entrepreneurial mistakes will set your start up in good stead for success. It’s great to be passionate about what you do, but remember not to jump in too quickly or ignore the advice or more experienced business people. Entrepreneurs are often caught up in their grand ideas and forget to pace themselves and focus on what really matters. By remaining mindful of the aforementioned mistakes, you can ensure that you stay in business for a long time to come.
At Woodville Accounting & Payroll one thing we do is help start-ups set up their business and finance function, while offering continued support with their business growth.
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