Starting a business is one of the best ways of getting employment. However, it takes a lot of skills, risks, and patience for a new business to succeed. Some businesses fail after only a short period because of the numerous mistakes most entrepreneurs make while starting a business. If you are thinking of starting a business, you should learn from the mistakes of other entrepreneurs that have caused the immature closure of their businesses.
As an entrepreneur with a newly opened business, you have already risked your capital to start it since there is no guarantee that your business will succeed in the first place. You should avoid doing things that put your business at a greater risk while it operates. They might be simple and avoidable mistakes, but they could force you to close down your business, plunge yourself into debt, or both. To help you understand what you should avoid when starting a business, here are some common mistakes most entrepreneurs make while starting a business and how to avoid them:
Mistakes that most entrepreneurs make while starting a business
1. Lack of proper planning
Lack of proper planning is one of the mistakes most entrepreneurs make while starting a business. Planning involves conducting a feasibility study to identify a market need and to see whether a business idea you have in mind can succeed in a certain area. This is to avoid selling products that don’t have a market. Starting a business before looking for target customers is a recipe for disaster and zero profits.
Once you have settled on a business to start, you should prepare a business plan to outline the best path your business should take to make a profit and grow in the future. You should also have enough operating capital to ensure that your business continues to run smoothly for the first few months when it hasn’t picked up well.
2. Starting too big
Starting too big is another common mistake entrepreneurs often make while starting a business. Many people think that they won’t be successful if they start small. However, this is not true at all. Your business can grow much bigger even if you start. Many companies started small but are now formidable businesses.
Starting a business with too large stock will not guarantee success. If the business doesn’t pick up well by bad luck, some stock, especially perishable goods, might go bad since they will be lying idle on the shelves because of few sales.
Starting with a small stock is not a guarantee for success, but gives you time to learn how the stocks move. You will get to know what your customers like and stock more of them. You will also learn about the stocks that are moving slowly and avoid stocking too much of them.
3. Lack of proper book keeping
Many entrepreneurs tend to overlook book-keeping, which is another reason for the premature failure of most businesses. Book-keeping involves recording your business’s financial transactions like sales and expenses while constantly keeping track of them. For you to get a clear picture of where your business is headed, all financial transactions should be correctly recorded. It should help you make important decisions concerning your business. Entrepreneurs should understand that lack of proper book-keeping is a recipe for business failure.
4. Partnering with the wrong people
Another mistake most entrepreneurs make while starting a business is looking for the wrong business partners. Partnering with the wrong people can cause your business to fail miserably. A wrong business partner makes poor decisions and may not be as hard-working or punctual as you are. The right business partner for you should be one that you share a lot in common. When looking for a partner to join you in your business, you should do due diligence to know the kind of person you will be dealing with.
5. Poor time management
Many entrepreneurs do not see the importance of time management. Poor time management is a mistake entrepreneurs should avoid while starting a business. As an entrepreneur yearning for success, you should always plan your time and be punctual when reporting for work. The last thing you should do is open your business when it is too late, keeping your customers waiting at your door. It is a costly mistake, as bad as sending your customers away to your competitors.
A great way of managing your time well while operating your business is prioritizing. You should first figure out what needs to be accomplished, then decide what’s most important. Finally, determine how long it will take to complete each work. Once you’ve figured out what needs to be done, you can start working on it.
6. Failing to hire employees
One of the biggest mistakes most entrepreneurs make is failing to hire employees. With too much work to do, you should not fail to hire people to help you because you will be putting too much responsibility on yourself, which might strain you. You should not assume that you can do everything by yourself. Hiring employees allows you to focus on other aspects of running your business. Therefore, depending on the size of your business and how much work needs to be done, you should always seek a helping hand to assist you.
7. Hiring relatives and friends
Hiring your friends and relatives to work for you is not an entirely wrong decision to make. However, you will tend to respect them so much that you might not have enough courage to correct or dismiss them when they fail to deliver as expected. As much as you respect them, they might be the reason for your business’s poor performance or collapse in future.
8. Not taking risks
Not taking business risks is a mistake most entrepreneurs make while starting a business. They probably fear running into losses and closing down their businesses. A good entrepreneur shouldn’t fear putting aside some money to try out something new. If you don’t take risks, you won’t find out if the risk is worth taking or not. So, you need to permit yourself to fail. After all, you’re only going to succeed if you put in the effort.
9. Poor pricing
Are your prices too high or too low? As an entrepreneur, you should avoid pricing your products too high or too low. Find the sweet spot by listening to your customers. If they say your products are too expensive, consider lowering your prices but be careful not to compromise your profit margin. If you think your prices are too low compared to your competitors, you should adjust them but avoid going higher than your competitors.
10. Overstocking or understocking
One of the most common mistakes entrepreneurs make while starting a business is not monitoring their stocks. Large stock in a slow-moving business is not worth it. You need your money back as soon as possible for re-stocking. Furthermore, you risk incurring losses if your stock includes perishable products that might go bad before being sold.
On the other hand, you should never run out of stock because your business records high sales. One of the worst things to do to your customers is to turn them away because you are out of stock. Therefore, you should always find the right balance while stocking.
11. Misusing capital
Capital is the lifeblood of any business. Therefore, using it inappropriately for personal needs is a mistake an entrepreneur should never make while starting a business. Without capital, your business is as good as dead. Capital allows you to purchase stock and raw materials, hire employees, buy equipment, pay rent, etc. In short, without capital, your business cannot operate.
12. Not implementing customer feedback
Whether positive or negative, customers will always give their honest feedback on your services or product prices. Ignoring them is one of the worst mistakes most entrepreneurs make. If you love your business and want it to survive, you shouldn’t ignore feedback and suggestions from your customers at all. Instead, you should encourage them to speak out whenever they find something wrong. Remember your customers are the main reason why you started the business and without them, your business cannot survive.
13. Not preparing for the worst
Not preparing for the worst is another mistake most entrepreneurs make. In business, there will always be high seasons when business is booming and low seasons when you can barely make sales. Apart from that, the worst thing that can happen to your business is emergencies like fire, or theft. You should always be prepared for such bad times by putting aside enough cash to cushion your business in case they happen.
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Starting a business is a risky venture. It can either survive and multiply your capital or collapse with all your capital. The mistakes most entrepreneurs make like the ones above are the most common and you should avoid them if you want your business to survive.