It’s unavoidable, regardless of whether it’s your first or hundredth time to start a business… Every entrepreneur makes business mistakes in every venture. Blunders can make or break a business, even more so for startup entrepreneurs. In fact, the U.S. Bureau of Labor Statistics reports that around 20% of startups fail during their first two years.
But don’t be discouraged. As Tyler Perry once said: “In business, it’s okay to make mistakes. It’s okay to learn, to have to learn, but do learn. Don’t let it keep happening over and over again.”
When you make a misstep, it’s important to see the experience in a positive light. Learn from it and use it as a valuable lesson on the path to achieving your goals. After all, history shows that even some of the biggest companies are no strangers to business blunders.
One example is back in 1985 when Coca-Cola released a ‘new formula’ for the traditional soft drink. The experiment lasted only 79 days in the market before the original drink was reinstated. While this may sound like a loss for the business, to Coca-Cola it was actually an important learning experience. Their trial gave rise to the profitable range of Coke flavors you see in every grocery store today.
For your convenience, we’ve listed the most common business errors every entrepreneur makes and how to easily avoid them.
1. Acting as a one-man team
One of the most frequent business mistakes entrepreneurs make is controlling all aspects of the business. Don’t get us wrong, it’s great to lead by example. But if you micromanage your employees’ every move, it won’t end well for either side. Employees will lose motivation because of a lack of trust while you’ll succumb to burnout.
What’s more, don’t bite off more than you can chew. Running and growing a business takes more than just one person, it takes a team of talented and motivated individuals. In fact, Harvard Business Review (HBR) found that improving employee motivation can increase gross revenue by 47%. Focus on the work that’s of the highest priority and delegate tasks to the rest of your team.
On the other hand, ensuring your employees consistently stay motivated can be challenging. Here are a few effective ways to boost job satisfaction and productivity:
- Encourage teamwork
- Be transparent
- Reward diligence and results
- Share feedback
- Engage in conversations beyond work-related matters
- Maintain a positive work environment
2. Lack of research
One of the most important tasks every successful entrepreneur has is conducting thorough research. The more time you spend learning about your industry, the more knowledgeable you become. When you know the lay of the land, it helps you identify your target market, competition, gaps in the industry, and current trends.
This will allow you to craft a business model that customers will eventually flock to. Some entrepreneurs expend so much effort on learning what their competitors are doing that they fail to find ways to innovate. You should keep a close eye on your competitors, but copying their every move is a huge mistake.
As Mark Cuban once said: “Focus on building the best possible business. If you are great, people will notice and opportunities will appear.”
3. Not seeking mentorship
Similar to mistake number one, most entrepreneurs think that they can run a business themselves without any proper guidance. In reality, there’s a lot that can go wrong in any business. And trying to decipher all the problems on your own can lead you into financial pitfalls. What’s more, if you want to avoid making business mistakes, having someone who’s been there will surely help.
A business mentor is someone who will provide advice, encouragement, and a different perspective as you go about your business. Furthermore, the mentee-mentor relationship is more than transferring decades of wisdom to budding entrepreneurs. Mentors can provide valuable connections and help you save time and money in learning what works and what doesn’t. In fact, a study by Kabbage revealed the following statistics:
- 92% of small business owners believe that mentors have a direct impact on the growth and survival of their business
- 89% of small business owners who didn’t have mentors wish they did
- 61% of small business owners actively mentor others
4. Poor online presence
As technology continues to innovate, so do the needs of consumers. Regardless of the industry you’re in, being active on different social media platforms can do wonders for your business. It’s simple to set up and makes it easier for customers to know more about your brand. If you don’t, you risk being left behind in this digitized era.
There are different ways you can use the power of social media to your advantage. You can run social media ads and use other online marketing techniques.
With a strong online presence, you are more likely to be noticed by potential customers, investors and talent.
5. No proper business plan
Starting a business is easier today than ever before. All you need is a sound idea and an innovative mindset. However, just because you’ve finally started a business, it doesn’t mean success is guaranteed.
One of the most common business mistakes startups make is launching without any proper planning. Every business owner has a vision of what they want to achieve, but many don’t put it in writing.
Writing a business plan takes weeks of research and preparation. That’s because the business plan provides a clear direction for what everyone involved in the venture needs to achieve.
A well-crafted business plan doesn’t have to be 50 pages long. But it should have the following clearly-defined content:
- Business description
- Executive summary
- Business structure
- Financial projections
- Industry analysis
6. Improper management of funds
The most concerning thing for an entrepreneur is seeking funds. Startups who have difficulty securing investors are often so hesitant to spend any of their budget that they overthink every move they make.
On the other hand, there are entrepreneurs who spend even when it’s not needed. This is where your business plan will come in handy. By having a blueprint for how you can achieve your goals, you can make better business decisions. If you struggle in managing your finances or raising capital, it’s best to hire a financial adviser to solve these problems.
7. Inadequate financial plan
As a business in its infancy, the most important thing is to properly manage your finances. You should think months ahead of what your business will look to prioritize in terms of expenditure.
Will it be to expand your offering? Spend more on marketing campaigns? Or increase your workforce? These are the kinds of questions you need to answer before you grow your business. What’s more, an effective financial strategy will ensure your business stays on budget and won’t incur any significant financial losses.
The goal of every business is to increase revenue year in and year out. One of the best ways to do that as a startup is to avoid making the most common business mistakes.
While miscalculations and lapses are normal in every business, it helps to have a good idea of how to avoid the worst of them. Remember, the pitfalls mentioned in this article and you’ll be that much more likely to achieve your business goals. Best of luck!
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