New Business Owner Mistakes and How to Avoid Them

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You have the money, you have the place, and you’ve done the research. You think you’re prepared. Then, one mistake and all your hard work goes down the drain.

You wouldn’t be the first new entrepreneur to botch something up, in that scenario. Ask any established business owner and they’ll tell you that running a business is not without its challenges and risks. This is especially true for startups. Data from the U.S. Small Business Administration (SBA) shows that around 80 percent of startup companies survive their first year in business, a little over 50 percent survive their fifth year, and only about 30 percent survive their tenth year.

Why are startups so difficult?

Starting a business is like putting together a disassembled, thousand-piece puzzle without a picture of what the completed one looks like. The only thing guiding you is how you imagine the finished picture. Basically, you’re creating something from nothing.

It will typically take hard work, dedication, and quite a long time before you put all the pieces together. There will be times when you think you’ve put the right piece in place only to discover that it doesn’t fit. At some point, you may feel like giving up.

But don’t worry. It’s normal to make mistakes when building your ideal company that’s been in your head for a while. This doesn’t mean, though, that all missteps are inevitable. Let’s look at some of the most common mistakes first-time entrepreneurs usually make and figure out how you can avoid them.

Failing to Plan Properly

Like Benjamin Franklin said, “If you fail to plan, you plan to fail.” Without concrete plans to guide your business towards its goals, you won’t be able to make sound decisions. That is why one of the longest, most rigorous, and important parts of setting up a business is the planning process.

Good business planning starts with setting up SMART goals, meaning goals that are specific, measurable, attainable, relevant, and time-based. Great business execution comes from taking these SMART goals and aligning them with a strategy based on accurate and current information. Some components of a good business plan are:

  • An overview of your business
  • A clear management and organizational chart
  • Financial and marketing goals and your plans to achieve them
  • Market analysis, including research on your competitors
  • An outline of potential problems and their solutions

Apart from serving as a guide, your business plan is also a key to securing financial help from banks and investors. Any entity that’s willing to bet on your business is more likely to invest if they see that your business plan can and will work, long-term.

Starting Your Business for the Wrong Reasons

Businesses failure is often tied to your reason for starting the business in the first place. So, think clearly about your “why?” for starting your venture.

Lots of aspiring entrepreneurs want to be a business owner because they want to become rich. Understandable. Making money is a legitimate business purpose. But the reason for starting your business should be different from mere acquisition of wealth – money should be a by-product of good business, not the sole goal. If you make it so, you may not be able to see the bigger picture. This will prevent you from making good business decisions that will lead to the growth of your business.

Other misguided reasons for building a startup are so you’d be your own boss or to have control over your time. Unfortunately, these are benefits that you’ll achieve if you’re successful, not viable reasons to start a business.

So what are the right reasons for starting your own company? If you’ve come up with a solution to a universal problem, you see an opportunity, or you have a knack for something that’s in demand and will likely be in demand for a long time, that’s when you start a business.

Not Setting Up a Website

Imagine baking a perfect cake after numerous failed tries and not letting anyone know. Imagine taking a picture with a social impact, like Kevin Carter’s Starving Child and Vulture, and not showing it to the world. That’s what setting up a business and not creating a website is like.

Websites are one of the best marketing tools a business could have. Proper optimization will help your startup attract new customers, drive revenue, and establish your brand’s online presence. It’s not uncommon to see new entrepreneurs that have entered the digital-industry with a strong online presence, and if you dig deeper into their online efforts, the acceleration of setting up the website was to outsource SEO. Clutch’s 2018 Small Business Websites report revealed that 64 percent of small businesses have a website, of which – 28 percent have spent less that $500.00USD on their website.

Since the creation, designing, and managing of websites are easier and more affordable than ever, if you don’t have the manpower or web development skills to create your own, outsourcing web design services is always a viable choice. There’s no reason for you not to have one.

Failing to Invest in Marketing

As mentioned above, creating a website is a powerful marketing move. But marketing takes on different forms, from traditional word of mouth to advertising via different media. In spite of marketing being a tried and tested business essential, some new business owners view it as an expense and cut it to the bone. This results in failure build brand awareness, generate leads, or create a buzz around a product or service.

Fortunately, there’s a straightforward solution: view marketing as an investment instead of as an expense.

For example, the way we treat our white label SEO with our partners is the same way your local car dealer treats their window tint upgrades when you buy your new car. The dealership only has an expense when there’s a confirmed window tint order, which is a guaranteed return on investment.

With enough research and benchmarking, who knows? Your $100 Facebook ad campaign may drive $10,000 worth of customers.

Undervaluing Your Products/Services

Speaking of marketing, you have to be smart and strategic about it. Some entrepreneurs end up putting a price on their product or service that’s below its value. This strategy could bite you in the rear. Under-pricing your goods or services undermines the unique value they bring to people. So, while there’s no denying that people will be drawn to more affordable things, others may view your services as inferior because of the low prices attached to them.

What you can do instead is to use the benchmark for profit margins in your industry, your sales projections, your desired profit, and the prices of your competitors. All these, combined, will help you figure out the perfect value for your goods and justify the prices you placed on them.

Overspending or Underspending

New business owners tend to be either the type to purchase the best of everything or the type who make do with the cheapest possible purchases. But, believe it or not, startups don’t need a fancy office or the latest technology (unless, of course, tech is your business). That said, you can’t skimp on essentials either.

For your startup, keep in mind that there are usually less expensive but equally viable options for things such as marketing, equipment, and even staffing. You may also look into the many ways you can grow your business with limited funds without

You have the money, you have the place, and you’ve done the research. You think you’re prepared. Then, one mistake and all your hard work goes down the drain.

You wouldn’t be the first new entrepreneur to botch something up, in that scenario. Ask any established business owner and they’ll tell you that running a business is not without its challenges and risks. This is especially true for startups. Data from the U.S. Small Business Administration (SBA) shows that around 80 percent of startup companies survive their first year in business, a little over 50 percent survive their fifth year, and only about 30 percent survive their tenth year.

Why are startups so difficult?

Starting a business is like putting together a disassembled, thousand-piece puzzle without a picture of what the completed one looks like. The only thing guiding you is how you imagine the finished picture. Basically, you’re creating something from nothing.

It will typically take hard work, dedication, and quite a long time before you put all the pieces together. There will be times when you think you’ve put the right piece in place only to discover that it doesn’t fit. At some point, you may feel like giving up.

But don’t worry. It’s normal to make mistakes when building your ideal company that’s been in your head for a while. This doesn’t mean, though, that all missteps are inevitable. Let’s look at some of the most common mistakes first-time entrepreneurs usually make and figure out how you can avoid them.

Failing to Plan Properly

Like Benjamin Franklin said, “If you fail to plan, you plan to fail.” Without concrete plans to guide your business towards its goals, you won’t be able to make sound decisions. That is why one of the longest, most rigorous, and important parts of setting up a business is the planning process.

Good business planning starts with setting up SMART goals, meaning goals that are specific, measurable, attainable, relevant, and time-based. Great business execution comes from taking these SMART goals and aligning them with a strategy based on accurate and current information. Some components of a good business plan are:

  • An overview of your business
  • A clear management and organizational chart
  • Financial and marketing goals and your plans to achieve them
  • Market analysis, including research on your competitors
  • An outline of potential problems and their solutions

Apart from serving as a guide, your business plan is also a key to securing financial help from banks and investors. Any entity that’s willing to bet on your business is more likely to invest if they see that your business plan can and will work, long-term.

Starting Your Business for the Wrong Reasons

Businesses failure is often tied to your reason for starting the business in the first place. So, think clearly about your “why?” for starting your venture.

Lots of aspiring entrepreneurs want to be a business owner because they want to become rich. Understandable. Making money is a legitimate business purpose. But the reason for starting your business should be different from mere acquisition of wealth – money should be a by-product of good business, not the sole goal. If you make it so, you may not be able to see the bigger picture. This will prevent you from making good business decisions that will lead to the growth of your business.

Other misguided reasons for building a startup are so you’d be your own boss or to have control over your time. Unfortunately, these are benefits that you’ll achieve if you’re successful, not viable reasons to start a business.

So what are the right reasons for starting your own company? If you’ve come up with a solution to a universal problem, you see an opportunity, or you have a knack for something that’s in demand and will likely be in demand for a long time, that’s when you start a business.

Not Setting Up a Website

Imagine baking a perfect cake after numerous failed tries and not letting anyone know. Imagine taking a picture with a social impact, like Kevin Carter’s Starving Child and Vulture, and not showing it to the world. That’s what setting up a business and not creating a website is like.

Websites are one of the best marketing tools a business could have. Proper optimization will help your startup attract new customers, drive revenue, and establish your brand’s online presence. It’s not uncommon to see new entrepreneurs that have entered the digital-industry with a strong online presence, and if you dig deeper into their online efforts, the acceleration of setting up the website was to outsource SEO. Clutch’s 2018 Small Business Websites report revealed that 64 percent of small businesses have a website, of which – 28 percent have spent less that $500.00USD on their website.

Since the creation, designing, and managing of websites are easier and more affordable than ever, if you don’t have the manpower or web development skills to create your own, outsourcing web design services is always a viable choice. There’s no reason for you not to have one.

Failing to Invest in Marketing

As mentioned above, creating a website is a powerful marketing move. But marketing takes on different forms, from traditional word of mouth to advertising via different media. In spite of marketing being a tried and tested business essential, some new business owners view it as an expense and cut it to the bone. This results in failure build brand awareness, generate leads, or create a buzz around a product or service.

Fortunately, there’s a straightforward solution: view marketing as an investment instead of as an expense.

For example, the way we treat our white label SEO with our partners is the same way your local car dealer treats their window tint upgrades when you buy your new car. The dealership only has an expense when there’s a confirmed window tint order, which is a guaranteed return on investment.

With enough research and benchmarking, who knows? Your $100 Facebook ad campaign may drive $10,000 worth of customers.

Undervaluing Your Products/Services

Speaking of marketing, you have to be smart and strategic about it. Some entrepreneurs end up putting a price on their product or service that’s below its value. This strategy could bite you in the rear. Under-pricing your goods or services undermines the unique value they bring to people. So, while there’s no denying that people will be drawn to more affordable things, others may view your services as inferior because of the low prices attached to them.

What you can do instead is to use the benchmark for profit margins in your industry, your sales projections, your desired profit, and the prices of your competitors. All these, combined, will help you figure out the perfect value for your goods and justify the prices you placed on them.

Overspending or Underspending

New business owners tend to be either the type to purchase the best of everything or the type who make do with the cheapest possible purchases. But, believe it or not, startups don’t need a fancy office or the latest technology (unless, of course, tech is your business). That said, you can’t skimp on essentials either.

For your startup, keep in mind that there are usually less expensive but equally viable options for things such as marketing, equipment, and even staffing. You may also look into the many ways you can grow your business with limited funds without severely limiting your potential for success.

Keep in mind that all successful entrepreneurs make mistakes. Bill Gates, Jeff Bezos, and Oprah Winfrey didn’t get the business success they’re enjoying now without a few fumbles along the way. What matters, though, is being aware when you’ve made a mistake and working to make well-informed decisions in the future.

limiting your potential for success.

Keep in mind that all successful entrepreneurs make mistakes. Bill Gates, Jeff Bezos, and Oprah Winfrey didn’t get the business success they’re enjoying now without a few fumbles along the way. What matters, though, is being aware when you’ve made a mistake and working to make well-informed decisions in the future.

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