The journey to starting a business can be tough and often marked with a lot of mistakes. Some of them can be avoided while others are bound to occur due to constraints that emerge. One of the ways you can avoid these mistakes is by heeding to the advice of those who've started business ahead of you.
We asked entrepreneurs and business owners on common mistakes when starting a business and here are the responses.
#1- Not clearly defining a strategy
Many businesses come out of the gates with only half a plan, an idea, an inspiration. Sure, it has to start somewhere. But, the reason many start-ups don't last is because they are not competitive. They lack a differentiation that matters enough to the market place. Everything in a start-up is messy and complex, so the foundation (a good strategy) should at least be solid, and represent the core of what a business is, how it provides real value to the world…how it changes the world.
Thanks to Jonathan Poston, 99CentRazor.com!
#2- Failing to establish a BAIL team
A common and costly mistake that business owners make is not establishing their B.A.I.L. Team. The BAIL team is the Banker (or financing source), Accountant, Insurance professional, and Lawyer. Establishing a BAIL team helps to guarantee that all bases are covered for the effective, efficient, and successful business start. In the world of DIY everything, most start-ups opt not to seek out the services of trusted professionals which oftentimes proves to be the start of their demise.
Thanks to LeTonya F. Moore
#3- Focusing on less important aspects
Many entrepreneurs tend to focus more on the appearance of owning a business, or the less important aspects, rather than focusing on what drives business growth. Allocating funds and (sometimes a more valuable resource) your time, to things like expensive office space, an unnecessary flashy website or branded swag, might be a waste of much needed capital. New business owners should focus on what drives sales, which is the lifeblood of any company. New customers and clients will inject capital into your business, allowing you to allocate funds that will continue to drive growth. Instead, entrepreneurs should try to cut costs where possible. Learn how to create your own website, work from a home office or co-working space, and maybe hold on those t-shirts with your company name.
Thanks to John Surdakowski, Avex Designs!
#4- Ignoring data
As someone starting out a new business, it’s easy to convince yourself that your product idea is superior compared to other products out there. There’s nothing wrong in believing yourself – and surely you must believe in yourself in order to succeed –, but your belief can be unrealistic. You should have data that validates that your idea is real. That data will act as a benchmark and show whether or not your business is progressing. When I started my cord-cutting blog a couple of years ago, some people warned me that I’m wasting my money, that the site couldn’t attract enough visitors to be profitable. Their opinions were based on their beliefs, not on verified data. Today, the blog is my primary source of income, and its profit margin is over 80%. Launching the blog was a risk, but I knew that my business was progressing, as I monitored the site’s analytics every day.
Thanks to Ville Salminen, Cordcutting.com!
#5- Lack of planning
It’s surprising how often people set up a business without setting any goals, or any kind of strategy on how they aim to become a success. They often consider planning to be too time-consuming and dismiss the necessity to plan with the belief that a small business won’t need to. Planning can be a long process, but the businesses which set out a clear plan with realistic goals, a plausible strategy and a thorough understanding of their market are more likely to grow successfully. It helps them spot the potential pitfalls of their business before they launch, giving them the opportunity to adjust their approach accordingly. A plan doesn’t essentially have to be a strict, formal document, you should be flexible enough to adjust your plan where necessary, it just needs to be enough to provide you with a guide on what you want to achieve, and how you are going to get there.
Thanks to Steve Pritchard, Cuuver!
#6-Not advertising
Not advertising is one of the biggest mistake new businesses make. They rely on referrals, word of mouth and other free outlets to save money. The truth is, a lot of success in a business can be contributed to generating an ROI from advertising. If you can get an ROI from ads, you'll get an even bigger ROI in your business.
Thanks to Ryan Stewman, Break Free Academy!
#7- Failure to invest in themselves
The biggest mistake I see new business owners make is not investing in themselves and in education right from the beginning. When I first took the leap into entrepreneurship, I borrowed $8,000 and took half of it to attend a conference that fueled my business success and changed my life. If you're not growing, you're dying. Especially as a a leader, you need to continually invest in your own personal growth, so you can lead others and create more opportunities in your world. You come first. Take care of yourself and always be growing: professionally, physically, financially, spiritually, emotionally. I encourage all of my team members to embrace the 52-to-1 advantage; that is, reading 52 books a year. Knowledge is power, and the more we can grow as individuals, the more retention, better culture, and greater success we'll have in business.
Thanks to Adam Hergenrother, Adam Hergenrother Companies!
#8- Not having focus on the market
The single most important mistake is to focus too much on the idea and not estimating the market for the product or solution. People who will pay for your product or solution is a very important metric that determines your ability to successfully build a business. The market can exist currently or one that can be developed or created, but not having any focus on the market is a recipe for failure. While there are exceptions, they are just
that; exceptions.
Thanks to Dr. Wasim Mohideen, Techmed Healthcare and Basil Wellness!
#9- Trying to be all things
I think the biggest mistake people make is trying to be all things to all people . It's easy to say yes to any and all requests made by clients but if their request falls outside of your area of expertise, you risk wasting a lot of time and even damaging your brand. Just remember what service or product you were so passionate about that made you want to start your business in the first place and spend your energy perfecting that thing or group of things. I think my clients really respect me more when I tell them no instead of trying to get every last cent I can.
Thanks to Guy Arthur Canino, Guy Arthur School of English!
#10- Forgeting the financial side
The #1 thing people forget is the financial side – reading, analyzing, and taking action based on what your financial statements are telling you. No one starts their business (unless you are a bookkeeper or accountant) to keep track of the financial side; ie, pricing, profit and loss statements, pricing, etc. Yet, if you don't pay attention to the financial side of business, you usually go out of business.
Thanks to Ruth King, Profitability Master!
#11- Not choosing a name that fits your brand
No matter what kind of business you're opening, take a look at the competition and focus on where they fail. Go through Yelp reviews, check out their websites, and do whatever you can to find their weaknesses. Then, figure out how you can succeed where they failed and promise it in your new company's name. For example, if you're opening a plumbing company and all of the local competition is too expensive, consider a name like Discount Plumbing or Bottom Line Plumbing. If the competition takes too long to respond, why not Minute Plumbing or On The Way Plumbing? And if the competition fails at customer service, try being The Friendly Plumber or Nice Guys' Plumbing. The worst thing you can do is pick a completely forgettable name, a meaningless name, or a name that undermines your strengths while showcasing your weaknesses. Don't just name the company after yourself, either.
Thanks to Joe Goldstein, Contractor Calls!
#12- Holding too tightly to the business plan
In those nail-biting first few years of a business, many entrepreneurs fight tooth-and-nail to execute against their original business plan—even when the market, their audience(s), investors and other factors start to point them in a different direction. Businesses, like us humans, evolve. Some of that evolution is within our control—some is not. The most successful entrepreneurs are the ones who know how to hold a vision for their business while listening and iterating on their ideas based on what they're learning. For example, YouTube's founders first business idea was a video dating site called Tune In Hook Up, until the site failed to takeoff and they shifted their attention to sharing videos instead. YouTube now has more than 1 billion users. Yelp started as an email-based referral network. When they couldn't get investors or users interested, they revamped the business to focus on the one feature from their original business model people were surprisingly interested in: leaving unsolicited reviews. They now have more than 93 million unique monthly visitors. The lesson: Create a smart business plan, and then hold it loosely.
Thanks to Alex Honeysett, Human Helm.com!
#13- Ignoring sales and marketing
Ignoring sales and marketing or as I like to call it if you build it they will come syndrome. Way too many business owners including myself have thought that having a good product or service is what makes a company succeed. The truth is that marketing and sales are critical and all too often do businesses shutdown because not enough of their target audience knows about them. I myself have had a hard time with my last 2 ventures and then started Logic Inbound specifically to solve this problem. To succeed you need great sales and marketing, couple that with a phenomenal product and that's how many win big.
Thanks to Vlad Mkrtumyan, Logic Inbound!
#14- Overwhelming themselves with tasks
When you first start a business, you may soon find yourself quickly overwhelmed by all the tasks and responsibilities you have. It's essential that you begin outsourcing any tasks that you possibly can. Create systems and video walkthroughs to teach contractors your process. Hiring out as many tasks as possible lets you focus on the big picture stuff. If you're a perfectionist (and even if you're not), it can be *really* hard to let go of tasks you're used to completing yourself. You may find yourself convinced that no one else can do the task as well as you can. Even if that's true (and it's probably not), the growth of your business desperately depends on you letting go and being willing to hand the reigns of certain tasks over to others.
Thanks to Meg Marrs, K9 of Mine!
#15- Paying too much attention to appearance
Many people starting up a new business put way too much attention on their appearance. No, I don't mean physical appearance, though that is often true, but more the physical look of the business. That is the least of your concerns in the early stages. Virgin, Apple, Hewlett Packard all started in homes and garages. Excessive overhead is what kills most new businesses. You really want to start out lean and mean as you refine your concept. Don't worry..with the internet, social media and your website today, you can create a fabulous brand image. You can buy all those shiny new offices, fancy computers, desks, etc. down the line. In the beginning it's all about making sure the brand survives so keep that overhead low!
Thanks to Craig Wolfe, CelebriDucks!
#16- Trying to decide on the corporate entity
Spending too much time trying to decide on which type of corporate entity. Speak with a trusted accountant and make a decision. You can always change to a different structure later, so don't waste time when there might be several correct answers. Focus on your work and grow your business!
Thanks to Jonathan Zacks, GoReminders!
#17- Trying everything
As entrepreneurs and business owners, we are often the biggest visionaries in our business, yet we are also our own worst enemies. We get in the way of our own success and we sabotage our own efforts to reach our fullest potential. I have been working in the business world for the past 17 years, and I’ve learned some important lessons about what it takes to grow a profitable and sustainable business. I’ve also learned about the mistakes that stunt business growth and in some cases cause businesses to outright fail. One of the most common mistakes when starting a business is to: try a little bit of everything. Most new businesses aren’t sure how to market and grow their business so they do a little bit of everything rather than a lot of something. For example, a little bit of networking, a little bit of newsletter, a little bit of advertising. Only to find out the ’try a bit of everything’ tactic rarely works at producing consistent and predictable results. If you choose three business development tools and use them persistently and consistently over time (while course correcting along the way), they will start to grow opportunities at a surprisingly fast rate, which leads to traction and momentum. Traction and momentum are two critical success factors for every start up.
Thanks to Michela Quilici
#18- Sticking to a plan and thinking you're always right
These two ways of thinking can take be detrimental to a company's growth. Having a plan is good, being willing to change it as your industry or customer demands change is better. Thinking you will always have the answer is something that can be tough for some business owners to swallow. I was one of them, I felt because in the beginning everyone came to me for an answer that as we grew I still needed to be that person. Letting go and letting others grow we give you the freedom to look at your company as a whole instead of getting tied up in every detail. Other people may even have better ideas to help your company!
Thanks to Christine Lock Bachman, Christine Bachman & Associates!
#19- People getting ahead of themselves
The most common mistake I see is that people get ahead of themselves. They want the $14,000 website, flawless branding, accounts on every social media platform, speaking engagements at TED, etc. in their first year of business. Every single business I've worked with that's been successful put their head down, did the work, and built relationships with people, and that's what helped them to be successful and also build a business that works in the long-term. It's not uncommon for 6-figure/multi-6-figure businesses to start building their online reputation 4-6 years into being in business, because they know that a lot of the online stuff is a distraction from actually getting paying clients or customers. They weren't looking for a shortcut or the easy way to do it without having to actually talk to people.
Thanks to Shannon Howard, You Need a Shannon!
#20- Hiring too many employees too early in the game
Start with a core group of dedicated players who will continue to strengthen your product, brand, and culture, and let it build from there. Otherwise, you might outgrow your concept before it even gets started. At Optimum Technologies, we have a core group of 12 employees and focus on growing our business, revenues, and reputation each month. From there, we are steadily growing our employee numbers in a way that scales.
Thanks to Simon Chatfield, Optimum Technologies, LLC!
#21- Failure to clearly define a vision
As the owner of blueberry cloud, I lend a helping hand to new businesses that want require help with marketing. A common mistake people make when they start their businesses is a failure to clearly define a vision that answers why they are choosing to start a business. Failing to define and stick to a vision results in a lot of actions directed by the business owner that do not help them get closer to achieving their vision. Thus wasting time, effort and potential joy; all of which negatively impact the business in a BIG way.
Thanks to Mazdak Mohammadi, Blueberrycloud!
#22- Emotionally investing in ideas
Too many founders follow clichéd startup advice to their death. Sure, ‘perseverance is key,’ but only if you persevere on the right ideas. Entrepreneurs fail when they cannot move past their initial idea of what makes their company special and necessary. Often, the process of building a business will lead you to find even better ideas along the way. But many founders are too emotionally invested in their original ideas to stray. While building Indicative, for example, I originally thought our behavioral analytics product would be embraced by small businesses, but once we’d actually built the product, it was clear the real opportunity was in the enterprise market. Our ability to detach from the initial vision and refocus our efforts has been key to Indicative’s success.
Thanks to Jeremy Levy, Indicative!
#23- Openness to Learning New Skills
Many startups are taking a new idea or are working with a franchise to become successful business owners. Unfortunately, too often, they believe they know how a company should operate or should look. That S word … should. There are many things new entrepreneurs *don't know that they don't know*. The key is to find and work with a business advisor. Do the work. Be open to learning and developing the skills you don't want to learn (e.g., using QB (or another accounting software)) so you can be successful. Complying with legal statutes and adopting common business practices.
Thanks to Jeannette Seibly, SeibCo!
#24- Three very common, and avoidable, mistakes
Not writing down their plan. A clarifying & focusing exercise is going through the process of deciding what you want, & what you need to do to get it. The questions, answers & decisions you make, then commit to paper (or digitally) pay dividends in increasing your chances of success. Not having enough money. Everything will cost more & revenues will be less than, you expect. Add the fact that collections will be slower than your forecast & you’ll realize you will need at least 50% more cash to start than you planned. Not seeking solid, professional advice. The reason the most successful athletes, business people & politicians engage professional advisors is; it works. that is how they stay on top; they hire professionals to make them better than they could be on their own. Take a cue from the most successful people you admire.
Thanks to Daniel Feiman, Build It Backwards(SM)!
What are the common mistakes that entrepreneurs make when starting a business? Tell us in the comments below. Don’t forget to join our #IamCEO Community.