It’s a common story for entrepreneurs to fail, sometimes many times over, before succeeding in developing a profitable start-up. There is plenty of logic in this: Founding a business is simply not an easy thing to do. However, there is every chance of succeeding in your first start-up if you learn from some of the errors and lessons-learned by entrepreneurs before you!
7 common entrepreneur mistakes & how you can learn from them
Remember: No two business models are the same.
What works for one company may be the cause of failure for another. The key is to take the teachings of what has worked and failed for another as much as possible. Weigh the differences and similarities to the characteristics of your own business and its needs. That being said, read on for seven common mistakes made by entrepreneurs.
1. The problem: Keeping your ideas a secret
Fearing that somebody may steal your money-making idea, you may want to keep their plans a secret from other creative or successful people.
Why is this a problem? The choice to refrain from any discussion about their plans automatically causes you to miss out on potential invaluable feedback.
- Actively seek out other entrepreneurs to network and share ideas with. Encourage one another to be openly critical. Someone who is experienced in the same field may be able to spot a potentially problematic error that you hadn’t thought of yourself.
- It’s a good idea for first-time entrepreneurs to find people who have successfully launched careers or new products similar to your vision.
2. The problem: Expecting to get rich quick
It’s unlikely that any idea will take off overnight and become an instant money-making machine (though not unheard of).
Many folks jump in to a business venture, quit their day-job, and go all-in with their plans without allowing for the option to fail. The hope is often that this confidence and determination will be the driving factor for the company’s quick success!
To someone who has heard success stories that merely put the spotlight on where the person got their start, and where they are now, it can be easy to get caught up in the dream that you could be just as lucky.
Why is this a problem? It may be more obvious to those on the outside looking in, but if you are too determined to succeed quickly, it is easy to get in over your head. Do not ignore the very high chance that your business seriously might not work, no matter how determined and hardworking you are.
- Start small, and DON’T quit your day job (yet). Keep the cash flowing until you have officially hit a point where your business is turning a profit of its own and can sustainably continue to do so.
- Be humble and realistic. Get excited and be confident, but be realistic with yourself about how much work it takes to succeed; don’t count your chickens before they hatch!
- Never let your business grow faster than you can support it financially, no matter how soon you believe you’ll have the money to cover expanding.
3. The problem: Assuming that a great product is enough to succeed
Another common entrepreneur mistake is failing to match the importance of correctly running a business with the quality of the product.
Why is it a problem? The first-time entrepreneur may be so confident in their product, that they believe the demand for the product will make for an easy profit. Unfortunately, it’s nowhere near that simple. Even the best ideas are only ideas if they don’t have a way to get into the hands of consumers. The only way to do this effectively and profitably is to be able to run a business correctly.
- Do not invest only in your product(s) themselves. Invest equally in the knowledge, training, and education of yourself and your entire team.
- Put a heavy emphasis on management and marketing strategies.
4. The problem: Trying to appeal to every consumer
Not every person is your ideal customer. You may feel pressure to appeal to the needs and preferences of every person.
Why is it a problem? Failing to identify your ideal client base and attempting to create a product that everyone will like is impossible. This is potentially detrimental to your brand. You can never please everyone! Making changes to include every group may result in changes that cause you to lose the very customers who are most likely to be interested in what you are selling.
- Identify the specific demographic most likely to shop with you, and focus your decisions around appealing to this group.
5. The problem: Letting your emotions cloud reality
You call your business your “baby.” It is the product of blood, sweat, and tears. Because of this, you may be seeing your product through rose-colored glasses. Any negative feedback makes you feel defensive, because how could anybody hate your baby? Your baby is beautiful.
Why is it a problem? Allowing your emotions to cloud your view of reality may render you unable to adapt to your client’s needs, or hear valuable feedback.
Take a step back, and regularly take time to try and see your product through the eyes of others looking in. Take feedback seriously. Carefully evaluate if negative responses are justified, if action needs to be taken or not, and whether or not your decisions are reflecting the needs of your business.
6. The problem: Avoiding awkward situations, at any cost
Especially in small small-startups, you may find yourself hiring on friends and even family in the beginning. What do you do when you notice that one of these people is not a good fit for the job, and are holding the business back? It can be easy to fear confrontation, especially with people you want to maintain your relationships with.
Why is it a problem? Keeping an employee on, simply to avoid the awkwardness of letting them go, is a slippery slope. If your Uncle Joe is making frequent, costly mistakes, receiving lots of negative feedback from customers, and isn’t contributing to the team, he is a major threat to your goals and the investments you have made in your company.
Regardless of your personal relations, your employees need to be capable of doing the job that you are paying them for. Remind yourself that you started your business to make a profit. Avoid hiring family and friends in the first place, if possible.
However, if you do make the decision to work with family or friends, be sure to discuss a firm policy of separation between your personal relationships and your business relationships. If the need arises to let them go, let them know as professionally as possible. Do not allow yourself to back out over fear of hurting your relationship. You did not start this company to hang out with friends.
7. Keeping your prices too low
You may be tempted to lower your prices to what you personally might feel you would be willing to pay for the same product. You may fear that you may lose sales if the majority of consumers cannot afford your product. Perhaps you want to gain an edge over your competitors buy offering irresistibly low prices.
Why is it a problem? Lowering your prices below a level where you can reasonably make a profit may devalue your product. There is probably a reason that your competitors have set their prices where they have, and pricing yourself below them for the sake of having the lower price may be resulting in perceived inferiority by your target consumers.
Price your product accurately, and without fear of losing customers that are not in your target demographic. Keep your prices high enough to turn a reasonable profit, and instead catch the attention of consumers with occasional deals and discounts.
Learn from the mistakes of entrepreneurs
You are bound to make some business mistakes, but you can learn from the errors and common mistakes made by those who have already been there. Research what has and hasn’t worked in the past, and apply what you learn to your business model. You can be part of the 10% who succeed on the first try!
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