Avoid these common blunders That New Entrepreneurs make Everyday and ones you’re likely to make if you aren’t careful
A ton of folks who jump into business for the first time haven’t the slightest clue the time and effort it takes. Most green entrepreneurs enter the business world thinking that the work involved is as simple as giving orders or crunching a few numbers. Boy are they wrong. And plenty of newbie entrepreneurs realize how consuming it ends up being.
The first assignment you need to complete is to honestly answer this question “Are you, (your name here), truly ready to be an entrepreneur and carry the burdens of one?” “Are you willing to put forth the time and energy needed to be a success?”
I know I sound super serious right now, but the work involved is not as sweet as it seems. You assume many roles, especially in your first months of operation. You are likely the strategist, the marketer/sales/ PR person, the manager and supervisor, the IT person and the employee. Not to mention the owner. Damn. Doesn’t seem as easy anymore, does it?
You have to be ready to wear any or all of those hats on any given day. Some days will be rough and exhausting, but you’ll have to dig deep to persevere if you want to one day assume just one role.
To prevent setbacks and money zapping mistakes, avoid these Common screw ups New Entrepreneurs Make everyday:
Blunder # 1: Not devoting more time to research a business idea for profitability
Many newbie entrepreneurs are more focused on their business’ end game and less on the plan that gets them there. Many aren’t even aware that things like operating locations can determine how much money they can make. Nor do they consider how much more money they may have to invest before they see a return on their investment, or whether they will make money at all in that area. There’s nothing wrong with wanting to make millions, but you have to research and bring together a plan that will actually guide you to that goal.
Your business idea will always be in need of R&D (Research and Development). Always keep that concept in mind. Picture your business as a machine. R&D helps you put this machine together, and R&D will help you upgrade and improve it. In order to know for sure that your idea will work, what it will take to make your idea a success, and if consumers will want any part of your idea, you’ll have to plan and research everything about it. And continue to plan and make changes when needed. Mind map your ideas from start to finish. Write different goal objectives and variations to them to keep your plan flexible. Write a damn business plan. No. Seriously. Finish this article up and write a plan. When you discover new methods and ideas, update your plan.
Blunder # 2 – Not willing to find out if your business is actually needed
I know, that does sound harsh, but many don’t consider if their businesses have value in the areas they choose to set up shop in. Believe me, I’m not here to shatter dreams or promote fantasy. To further drive home my point stated in Blunder #1, your research may bring you to the realization that your idea is realistically unachievable at the moment. I believe that anything in this world is possible. Just about any idea is doable. On the flip side, if you are on the ground floor of pursuing the path of self-made wealth, you will have an unreasonably difficult time trying to create a market that doesn’t exist without a large amount of funds to spur its creation. Pushing a product that no one needs or wants can force you into an uphill battle paved with lost investments.
I see it more often than ever in real estate investing and restaurant startups. Not knowing your target location means you’ll have to convince locals who wouldn’t otherwise eat your food to….eat your food.
A real life example would be an area near me that recently gained a fine Mexican restaurant on its commercial corridor. Unfortunately, it’s in an area where the locals are older and stay true to the foods they are familiar with. To make matters worse, the closest Mexican community is about 20 minutes away on the other side of town. Even though this restaurant decided to add foods to the menu that are similar to local favorites, the amount they were selling didn’t make up for the food they were buying, and ultimately wasting. The restaurant recently closed its doors unfortunately.
I’m all for being first to a new area. Being the only game in town for a type of business can be great. Just make sure you won’t have to blow precious time and money letting people know that you exist, then convincing them that they need what you’re selling.
What can you do to avoid that headache? Market research. It may cost a little up front, be it in money or time, but it will save you more in the long run. Don’t know how to do market research? Outsource it!
Blunder # 3 – Not understanding your industry
Most people have somewhat of an idea of the industry they want to enter into and how it operates. Even less of those people know the inner workings, the history of, and what the future outlook is likely to be of their chosen industries.
George Santayana said: “Those who do not learn from history are doomed to repeat it.”
That saying is absolutely relevant in business. Every day, a new entrepreneur takes themselves out of the game by making similar mistakes as the people before them. (Luckily for you, much of those generalized mistakes are in this list.)
Digging into the history of your industry also allows you to get a better understanding of HOW your industry is thriving. When you know how your field ticks, you will begin to see things that are missing. You will see needs that can be satisfied by you. How can you possibly be an innovator in your field if you don’t know, cover to cover, how it operates?
Blunder # 4 – Not being able to explain why your business is great and how in a 30 second to a minute elevator pitch
Let’s be honest…. if you saw a local successful investor walking to a curb to hail a taxi, could you:
- Get his attention?
- Explain what your products and/or services are?
- Tell him how much your products or services make or will make?
- Do it all within a minute or less?
Remember, I said to be honest. I know, for a few of the businesses I started in the past, I couldn’t do all four of those things efficiently. Many of us don’t even think about these things. That has to change.
You’ll need to understand the business you started, summarize how cool your business and it’s products are, and practice explaining it to people. Try to keep your pitch as brief as you can.
Blunder # 5 – No initial research on your market and how your business fits in it
Countless entrepreneurs fall victim to this, the mother of all blunders. And before you start scratching your head, this is not a repeat of Blunder # 2. Let me explain.
You want to start a bakery. You have some great recipes for cakes that you think will make you a ton of money. You buy the bakery, the baking equipment and the supplies. You’re ready to go. The lines forming for your cakes and pies are wrapped around the block. After racking up sales, you begin to realize something. Many of your past and potential customers within the area where you opened your bakery are predominately vegan. Once everyone finds out your baked goods use dairy, your sales plummet.
Had you done the initial market research, you would have known that the operating location you chose was in a vegan/hipster/millennial location. Not notifying these customers of milk products could tarnish your image, and millennials and hipsters are a grudge carrying bunch.
A damaging addition to your problem could be if there are other bakeries in your area that didn’t make the same mistake you did, retaining their share of the local market.
That’s just one of many scenarios that initial market research can prevent. Know the condition of your waters before you sail them.
Blunder # 6 – Not having an advisor with experience
Ugh. At first I was going to strike this from the list because, in my opinion, it isn’t applicable to everyone. Some business types may operate along the road less traveled, making available advisors scarce. I can think of a few industries where the managers are hard to find and the owners and founders even harder. People with valuable experience may not be available to some of you reading right now.
For the rest of us here, on the other hand, finding someone who could advise us and answer questions isn’t as difficult. You may even have relatives who are in the same field you want to venture into. If I decide to open a bar or a lounge in a nice part of the city, I can (and do) get pointers on bar promotions and what to expect as a bar owner from my uncle.
Making your start as a small business owner, it would help immensely to have someone in your corner that can be your compass, making sure you are going in the right direction. Without, of course, telling you how to run your company. We’re talking about an advisor, not a partner.
Blunder # 7 Not having a sufficient operating budget
Are you confident in the budget you have decided on? Are you sure it’s enough? Take into account things like defective products and returns, potential increases in expenses, theft, delays. What about your projected sales falling behind expectations?
Should the equipment that you use to run your business or perform the services you provide fail to work, could you replace it without destroying your budget?
Having an insufficient operating budget is a common killer of small businesses. However, this problem can be repelled by having a budget that is padded for unknown situations.
The best general contractors always add a percentage on the cost of their supplies to protect the project from unknown occurrences and supply waste. Put that tactic to use when creating budgets for your business.
Blunder # 8 – Ignoring the awesomeness of marketing
Commonly, business men and women start out not considering the awesomeness of marketing. Either that, or they assume that a little advertising is all they need before momentum kicks in and everyone knows who they are. I hate to break it to you, this ain’t Cheers, and you aren’t Norm. Everyone will NOT know your name.
Unless you have a high profile product, or a high profile client who endorses you, you’ll likely need ad injections from time to time throughout your company’s life. Think about it, everyone knows about Pepsi, Gieco, and McDonald’s, but you still see their ads right? Even the big guys do it.
The need for advertising and marketing never stops, regardless of how big you get. And growth will come from attracting new clients with solid advertising.
Blunder # 9 Not having a sufficient marketing budget
I made this blunder last year selling a product I developed. I was selling a deluxe wine set on Amazon around Christmas time, which is a gold-mining time of year for my product. My goods were in stock and ready for sale. I started my ad campaign and drained my budget in two weeks. Sadly, there was still another 60+ days until Christmas day. Needless to say, I made much less than I could’ve had if I set aside more money for my ad campaign.
Pardon the expression, but don’t half-ass your advertising. Ad dollars out is sales dollars in times ten. If your ad campaign gets cut short, so will your profits.
I’m going to step out on a limb and include one more thing that you don’t want to ignore when plotting your marketing budget. Your promotional items. Whether they be sticky pads and pens, samples at your store, or discounts on your services or products, make sure your budget will allow for them. You’ll want to make sure that you have enough working capital to afford potential deep cuts in your profit to run promotional services or give promotional products. Either that, or have a promotional budget that would cover your loses.
Everyone isn’t going to run a promotional marketing campaign at a loss, especially when starting out, but for some of you with the guts to do it, make sure that both the ad and promotional budgets are enough. You certainly don’t want your marketing investment to be for nothing.
One more thing to consider. Your brand is important, we know that. So if you are, for instance, an upscale clothing boutique, you definitely don’t want to print your grand opening flyers on regular computer paper. Unfortunately, running short on cash will cause you to cut corners to stretch your money which will likely hurt your brand and appearance. Make sure that your marketing campaign budget can support the brand you want to develop.
Blunder # 10 – Spreading yourself too thin
When you are an army of one, you won’t be able to help this problem completely. You still will have to be careful not to over-extend yourself. Almost every job you are doing now can be outsourced to someone else, allowing you to handle the most important things that only you can do.
This website is a perfect example of outsourcing tasks to save time. About a third of the work put into this website is handled by great and capable people outside of the SDWS crew. With time consuming issues outsourced to others, we can spend more time putting everything we have into developing a website that helps you make money.
Much of our jobs as entrepreneurs are administration based. What that means is college students in need of extra pocket money can be outsourced as your virtual assistants. I’m sure a lot of us have young family members who can handle our company’s social media campaigns. Other people can do the tasks that take time away from more urgent matters.
I say all that to say, if we decide to carry our entire business and it’s inner workings on our back, two things will likely happen. Either we will burn out from the stress of carrying the full weight of a company, or we will stumble and things about our company will fail.
I feel like I’m saying something that everyone likely already knows, but will in turn, do the opposite. Please, just get help. We don’t have to do this alone anymore. Scan through Fiverr or Elance and hire some temporary employees. You won’t regret it.
That’s all for now, ladies and gentlemen. Be aware and avoid these common mistakes like the plague, now that we have identified them. Steering clear of these issues will certainly keep you afloat.