An entrepreneur is someone who starts a business and takes on all the risks associated with it to make a profit. Entrepreneurship isn’t an easy path to go down, and there are plenty of lessons they learn along the way to do so.
Roughly 45% of businesses don’t make it past their fifth year, and many entrepreneurs quit after this period. While there are many challenges and struggles t o face when starting a business, the most important thing is to learn from your mistakes.
In this article, we’ll learn more about the mistakes entrepreneurs make when starting a business and how to avoid them.
1. Poor planning habits
This is one of the biggest mistakes most entrepreneurs make when starting a business. Your plan is your roadmap to being successful, and if you fail to plan, you plan to fail. To avoid this mistake, the best way to go is to create a business plan that includes the following information:
- Researching your current market status: Where do you currently stand in the market?
- A buyer persona: Who is your prospective customer? Are you targeting a global audience or a local one?
- Competitor analysis: Who are your competitors?
- Setting your goals with the SMART approach: The smart approach is one of the best ways to define your goals, so this means your goals need to be specific, measurable, achievable, realistic, and time-bound.
- Marketing strategy: Shows how you plan on promoting your business and how you will reach new customers. Is this going to be through social media channels, events, email marketing, or another approach?
- Operational plan: How is your business going to operate?
- Market research: What kind of product and service are you going to sell? What kind of problem is your product or service going to solve?
- Financial plan: Where are you going to get your funding sources from?
A business plan is a great way to start and many entrepreneurs don’t pay too much attention to it.
Statistics show that entrepreneurs using a business plan are 260% more likely to launch their new business compared to those who don’t use one.
2. Not enough market research
Not understanding your target market, industry, or competitors can be misleading in regard to demand and your pricing strategies. Market research is your only tool to learn more about your market, and it influences how much you know about your customer's attitudes toward your brand and market performance.
We mentioned that your market research should be part of your business plan, so this means you should know who your target audience is, analyze your competitors, and stay updated with industry trends at all times.
3. Hiring the wrong people
It’s always important to pay close attention to the mindset and skillset of the person you are hiring. It’s always more challenging to hire people who are willing to commit to your startup and help you grow.
Hiring the wrong people can also cost you more money as you would need to waste time and require you to hire someone else. The U.S. Department of Labor claims that a bad hire can cost a company up to 30% of an employee’s annual salary.
4. Wasting too much money and time on building a website
You’ve just gotten started and common mistakes entrepreneurs make when starting a business are wasting too much money on websites. Many new AI tools are capable of building a website in a matter of minutes and cost much less than hiring someone to do it for you.
The great news is that most of them offer free trials that you can use and are much cheaper than hiring someone to build a website for you. Of course, as a startup, you want to save time and money as much as you can, so this is one mistake to avoid when starting as a new entrepreneur.
5. Ignoring customer feedback
One of the biggest mistakes you can make as an entrepreneur is to ignore your customer’s feedback. More often than not, this isn’t intentional but is advising business owners to improve their way of working. After all, customers are the ones who determine if your business will succeed or not and it helps you become a master in optimizing customer experiences.
It’s not just about receiving the feedback but responding to it as well. The best option is to always have someone responsible for dealing with customer feedback from different sources like social media, phone calls, comments, and other issues that are related to your services.
6. Choosing a bad business name
Choosing a bad name for your business isn’t something you want to happen. Common mistakes when choosing a name for your business include:
- Choosing a name most people can’t spell
- Choosing a name based on a niche
- Not testing the name and if it reflects the brand's identity
While technology has advanced so much over the years, if you find it challenging to choose the right name for your business, you can always use a brand name generator.
Brand name generators will give you a simple business name that will operate based on the type of information you input. They’ll ask for the industry you are operating in, and your brand description.
Brand descriptions have a lot of influence on how your business name should be, so this is something to pay close attention to when writing one.
7. Not tracking finances
Finances play a huge role in your entrepreneurial success, and one of the most common mistakes entrepreneurs make when starting a business is to track finances. Whether you do this by hiring an accountant or using bookkeeping software for it, it’s always important to keep a close eye on your finances at all times.
8. Avoiding change
Let’s be honest, many people don’t like change, but it’s what keeps us going and the market is always bringing in new trends we need to stay updated with. Change is especially hard when you are doing great, but as the digital world keeps evolving, it’s important for entrepreneurs to adapt to change over time.
Try to make it a goal to try something new every few months, and let’s face it, as an innovator, you need to be willing to take risks all the time.
9. Trying to do everything on your own
You can’t be skillful at everything, and something you need the most when starting a business is time. Therefore, you need to delegate tasks to other team members and let them take care of their work and you focus on your business growth.
During your planning phase at the beginning, it’s important to mention which roles you need in your organization and assign them accordingly.
10. Ignoring the competition
It’s easy to ignore competitors at the beginning and only focus on your business, but competitors might be one step ahead, and when you don’t follow their next move, they might be offering customers a solution that you aren’t.
Every business has competition, and even if you think you don’t have any competitors, you simply might not know them just yet. Also, competition is healthy, so while they advance one step ahead, this might help you become more innovative.
11. Not monitoring your progress
Progress is the key to growth, but you can’t ever know where you are at if you fail to monitor your progress. Create live documents when monitoring your progress and update the plan as you keep on growing.
If you can stay consistent in monitoring your progress, it’ll be much easier for you to update your plan and see what is working for you and what isn’t.
12. Buying too many assets from the beginning
Another common mistake entrepreneurs make when starting a business is buying too many assets which can easily cause a cash shortage. You need to know how much you’ll be spending on machinery, equipment, and IT outlays. Always pay close attention to your overall finances as many entrepreneurs might not track expenses and end up being in major debt from the beginning.
Poor decisions can be costly in the long term
We mentioned the big mistakes entrepreneurs make when starting a new business, but the good news is that now you are well aware of them and it’s your time to shine by avoiding these mistakes.
Always remember that awareness is your first step to improvement and now that you know what steps to avoid, it’s time to start your new business with the right practices!