Over 50% of businesses fail within their first four years of existence. This is not only a staggering number, but it’s also a terrifying truth. It means that if you were to launch your entrepreneurship career today, your company might have closed down by 2023. For an enthusiastic entrepreneur who is keen to roll up their sleeves and embrace the market potential, it is devastating to know that your efforts might be in vain.
However, it doesn’t mean that you shouldn’t become your own boss. On the contrary, you can learn from the failure of past entrepreneurs to avoid some of the traps of a business launch. Indeed, while the market can change and demand can decrease, more often than not, businesses shut down as a result of costly mistakes they’ve made. Below are the ten most harmful errors of young entrepreneurs:
#1. They don’t have the mental strength
Running a business takes a lot of skills and knowledge, but it requires a lot of emotional and mental energy. You need to get up every day and be ready to tackle what the day has to offer, even if it’s bad news. Indeed, you have to be able to keep going, despite the disappointments or the setbacks on the way. As a first-time entrepreneur, you have to be realistic about your business journey. Failures do happen, but they don’t define the end point of your journey. On the contrary, failures are lessons to be learned and reflected upon so that you can improve your strategy. Giving up at the first obstacle is not an option. However, it is, unfortunately, a common mistake for first-time business owners. Hiccups are not an indication that you should stop your entrepreneurship journey. Stick in there and push through, adapting your style to your surroundings.
#2. They are experts but not in business matters
Solo-entrepreneurs tend to focus on their area of expertise. Whether they are professional marketers or decor designers, they build their business strategy entirely on promoting their expert skills. However, this can lead to a common misconception, namely believing that you can establish a successful entrepreneurship journey using only the skills you intend to sell – aka the skills that are essential to the delivery of your services and/or the creation of your products. But a company requires a sense of direction which you need to inject through your know-how of the business world – it’s something you can brush up with a BS organizational leadership degree. Ultimately, you need to know how to make effective business decisions to manage processes, teams and company culture successfully. Indeed, your business is a complex machine that needs a leader who keeps operations under control.
#3. They face new money decisions they’re not prepared for
You might not have yet run through financial difficulties with your personal budget, but things are a lot different when it comes to your business finances. For anyone considering launching a business, the first issue occurs when you’re trying to estimate how much it will cost to start your entrepreneurship journey. As a result of lacking basic knowledge, most aspiring business owners fail to build an accurate budget. As a result, they don’t know they have enough money to start their business venture. This can affect not only the development of your company but it also impacts your personal finances in a situation where you try to self-finance. Additionally, nobody wants to launch a company in a broom closet. You want an inspiring workplace, and as a newbie entrepreneur, you are more likely to invest in unnecessary luxury items, increasing the expenses of the business.
#4. They don’t prepare their business plan
Who needs a business plan? You’ve just started! You haven’t yet explored the market or even your full potential! That’s precisely why you need a business plan that defines where you want your company to be in three, five, or ten years. The core purpose of the plan is to encourage you to consider all the opportunities and functions of your venture. Your priority is to establish thorough market research, which you use as a base to assess the market size and the types of customers. Defining how the market is segmented – as well as who your competitors are – is vital to the creation of your business strategy. Your plan will document your findings and your approach to acquiring customers and hiring talents, as well as exploring operational milestones.
#5. They overwork themselves
You’re a business owner. You need to work harder than everyone else in the company. While it’s fair to say that your teams expect you to show dedication to the business, there’s a golden rule when it comes to workaholism; namely, don’t do it. Entrepreneurs work hard to keep things in control. However, working more and longer hours is not the solution. Indeed, you’re likely to experience a decline in your ability to read your team behavior, which can affect your leadership. Additionally, the more you work, the less you sleep and, as a result, your stamina and your decision-making skills are affected considerably. Besides, overwork is not a synonym for productivity. On the contrary, the more you work, the less productive you become, which means that you’re not only slowing down your business, but you’re also more likely to make mistakes.
#6. They suffer from entrepreneurship blues
The entrepreneur often sits lonely on top of the business hierarchy. When you start your entrepreneurship journey, you need to accept that there are going to be lonely times. Consequently, introverts tend to be better equipped to become business owners. However, loneliness is a real issue for all entrepreneurs, and it is closely linked to mental health problems. Solo-entrepreneurs, especially, are the first to struggle with the slippery rope of loneliness. You need a social network to stay engaged and motivated. Starting with the basics, a coworking space can offer an appropriate alternative to your home office environment. You can join business networks to exchange ideas with same-minded entrepreneurs and find a sense of belonging to the big business community. Ultimately, loneliness is a silent and invisible disease that can take over your mind, and increase the risk of heart disease and cancer.
#7. They don’t recognize a bad idea from a good one
Is your idea good at all? The uniqueness of your opinion does not qualify its profitability. But for new entrepreneurs, it can be tricky to take a step back and empirically analyze and test the validity of your idea. Consequently, it’s important that you work on an idea pitch very early in your business journey. If you know professionals who understand your market, it can be beneficial to invite them for a chat and test your business pitch. You can also opt for a physical experiment by creating a viable product or service for sale, which lets you test out how the market is going to respond to your idea. However, don’t invest too much budget on designing a final product; instead, you should focus on the minimum vital product that explains or introduces the process without incurring the manufacturing expenses.
#8. They don’t treat their team with kindness
As a new entrepreneur, you have a lot on your plate. You work hard. You’ve invested a lot of time and money in launching your business venture, so it’s only natural to expect your team to give the best of themselves. However, there is a thin line between being a strict employer and failing to treat your employees with the respect they deserve. Be sure to keep your head clear and take the time to listen to your staff’s concerns. Even when you feel crushed under the workload and the pressure, you should make communication a priority. It’s easy to focus on the work at hand and forget the people around you. But in the long term, failure to communicate appropriately and make your employers feel appreciated can affect the future of your business.
#9. They don’t network
Isolated entrepreneurs have a hard time making it onto the market. Buyers need time to get to know and trust new brands. If you want to get noticed, you need to think creatively. Your marketing strategy can only get you so far. You also need to find supporters within the market. In other words, you can build a professional network, using your suppliers, partners and beta clients to establish your presence. As a newcomer to the market, you can benefit from trusted advocates, such as your provider producing a case study of the services they tackle in your company.
#10. They try to do it all
Starting a business is hard work. But many entrepreneurs make things more difficult for themselves by trying to tackle everything in the company. If your expertise lies in content creation, it could be tempting to build your own website in order to showcase your portfolio. However, the skills required in content creation are different from those you need to create a website. As a consequence, your site may not achieve the professional look you expect. Ultimately, you want to trust experts where you need them.
Small businesses can fail very early in their lifetime. While you can’t control the market conditions, you have an input on how you manage and prepare your business presence. Avoiding costly mistakes can keep your entrepreneurship journey going for longer!
Image Credit: Flickr.com