Any entrepreneur who has started a new business knows that it is anything but easy. While you might feel extremely motivated to see the changes your business can make in the world, there are also a lot of struggles along the way. Entrepreneurial ventures are fraught with mistakes, missed opportunities, and even mishaps.
Though it’s inevitable, understanding and preparing for potential risks can ease your worry and help you avoid some of the costly mistakes. Most new businesses are prone to the same kind of mistakes and it could range from small fixable mistakes to digging a financial pit that leaves you in financial pain for years to come.
With that in mind, here are the 5 most common mistakes that new business owners make.
1. Not understanding your ideal customer
The very first question you should ask yourself is: “Why does my business exist?” And the second one is: “What problem does my business solve?”
A common startup mistake is that business owners don’t take enough time to understand the market or survey industry needs. For example, although software-based businesses are in high demand now, there is no way to know if you’re on track unless you get feedback from existing or prospective customers.
The harsh truth in the business world is that if somebody is already doing what you plan to do and can do it better than you, it will be more than tough for your business to turn a profit.
2. Having the wrong idea about marketing
The two mindsets that new entrepreneurs have are “You have to spend money to make money” or “I’ll spend the bare minimum until my business makes money. While this is understandable, as generating cash flow, in the beginning, will take priority over anything else, but if any of these two mindsets are taken to the extreme, it can be harmful.
Marketing is a must, even if your product is revolutionary. Think of it as the bridge between your ideal customer and your business, without it, both of you are just never going to make the exchange.
In reality, most startups need to invest heavily in marketing to differentiate themselves. Just make sure that your product lives up to the expectations of your buyers.
3. Thinking it’s a way to make quick money
Getting into entrepreneurship for the money is almost never going to work out. In fact, it’s going to take years until you see significant cash flow. Starting a business because of the pandemic and MCO without any plans is not a way to generate income. Even with a well-thought-out plan, you might still fail.
Your business plan is the foundation of your small business. It’s a blueprint and a map for you to follow when things get rough and a structure for your operations. And when the time comes, this business plan will help you get investment funding to exponentially expand your business. Not only that, but it can also be a guide when you’re looking to hire new employees.
Pro tip: Start with the end goal, then break down the steps needed to get there. That’s your business plan.
4. Doing everything all at once
You’re driven, you’re motivated, you’re enthusiastic, and you’re willing to put in the hours. That’s all great but it will lead you down a problematic path if you go at it all solo. We’re all merely humans, there’s only so much we could do before we get tired.
There is no doubt that running a business is hard work. However, research has shown that without proper relaxation and winding down, there will be an opposite effect where you’ll become less productive.
Don’t sit there for hours, you’re not there just to warm the seats. Look to be productive instead. Take care of your health and think long term. Otherwise, delegate the tasks or hire freelancers to help you with them.
5. Tax liabilities
There is a saying in our society: “There are two things in life you cannot escape from — Death and taxes.”
You may have bristled upon some taxes being taken from your paycheck at a full-time job, but that is relatively simple. Business taxes are much more tedious. You might even get caught up in the day-to-day management of the taxes and you cannot not do it. Pushing it to every April is not a good idea as you might struggle to compile all the transactions you’ve made.
Taxes are the responsibility of every company. So do things right from the start and develop a process for it. Hire the right professional for the job if you have to because the cost of not having it done properly is much greater than the cost of hiring a professional accountant.
Remember that business plan you have? Use that to estimate how much taxes you need to pay.
Living the dream of owning a business that you’re passionate about is still very real and attainable. Just make sure that none of these mistakes hinder you from a successful business.