Business owners make a lot of mistakes, especially first-timers. Are you thinking of starting a business? If so, you are part of a group of millions of people who are taking their destinies into their own hands. Though starting a business is difficult, it’s certainly possible to make things easier by avoiding certain mistakes. New business owners are notorious for making mistakes, as this is all new territory for most people. Here are some of the common mistakes that new business owners make, as well as solutions for avoiding them:
1. Getting into the Entrepreneurial World for the Wrong Reasons
“You can jump into entrepreneurship hopefully because it’s your calling. But, if you are one of those that get into this game because of wrong reasons (e.g.: Questionable reasons to become an entrepreneur #1 – My friend did it, so can I) then sooner than later, you will be in trouble.”–Rajesh Setty, co-founder of multiple startups in US and India
2. No/Poor Customer Engagement
Another common mistake that new business owners make is not engaging with their customers enough. Your customers are literally the bread and butter of your business, so take time to check in with them. Are they happy with your product? If not, why? Getting to know your customers and clients not only makes them believe that you truly care, it also helps to bring about a new business in the future, whether from them or through word of mouth.
“Your customers should love your product. If not then you have a real problem. You need to find out why. The only way you can do that is by really listening and responding to their needs. Make sure that you are connecting with your customers on a daily basis.”–Brian de Haaff, Co-founder and CEO of Aha!
Though you might start out on your own, as your business grows, it’s likely that you will require help. However, many business owners make mistakes when hiring. Don’t simply hire someone who is “good enough” just to get much-needed help. Instead, choose to hire someone who shows intelligence, tenacity, and the skills you need to make your business a success.
The team is the most important piece of the startup puzzle and one wrong hire can lead to its downfall. Hire for skill, intelligence and tenacity first…It is easy to fall into the trap of hiring people who are “good-enough” when a startup is trying to ramp quickly, but it can be deadly. If you do make a mistake, fire fast.” –Evan Reas, Co-Founder of Hawthorne Labs.
4. Forgetting to Lock Down Your Intellectual Property
“It’s critical for a new business to lock down their IP, including patents, trademarks, and copyrights. If the competition files a patent over the top of another business, which is likely to happen eventually, the new business could end up owing fees or even not being allowed to sell their product, which no new business can afford.”–Jeff Nelson, Invented Chromebook, Entrepreneur since 93.
Data is insanely important for making informed decisions about almost every department of the business. You may have a strong gut instinct but use data to find out what customers want, and provide business value to match those needs.
Successful businesses rely on data to make product improvements. Get to know your prospective customers. Study your market. Use focus groups to determine customer needs, and analyze metrics to see what’s working and what isn’t.
6. Being Careless With Accounting
The financial side of things is often the most difficult part of owning a business, and thus, people make a lot of mistakes. For instance, are you simply throwing money away on advertising you don’t need? Are you paying your staff for more hours than they are working? Tools such as Timesheet Portal can help you keep track of things and keep some of your hard-earned money in your pockets.
7. Growing Too Quickly
Finally, you want to make sure that you are not growing too quickly. You must keep up with your company, and if it gets too large, too fast, it’s only going to spell trouble. So, make sure that you have a good handle on your current situation before you do things that might cause business growth.
8. Failing to Realize the Importance of Cash Flow, Not Just Profit
“You need to maintain a moving 10-13 weekly cash flow forecast to survive. Stay liquid with your cash and beware of tying it up because “cashflow is more important than your mother.”–Peter Baskerville, Started, owned and managed over 30 small businesses.