If you’re trying to launch a new business, you’re probably going to commit a lot of mistakes at first. That’s not really surprising. But what you need to understand is that you can actually learn from other entrepreneurs and see what they did wrong. By recognizing the mistakes early, you can prevent yourself from committing the same ones. Hopefully, you can keep your business afloat for a lot longer instead of making a fatal mistake that will sink your new enterprise.
Here are some of the common mistakes made by new entrepreneurs:
Starting your business without adequate capital
To make money you will first need enough money. It’s always tempting to start a new business right away even if your capital is inadequate, but pretty soon you may find that the lack of capitalization may be hampering your growth. You may need to spend money on new inventory, for example, and the lack of capital can just grind your company to a halt.
Not spending your money wisely
Some people accumulate a lump sum for their business and immediately spend it in useless ways. You may spend a huge chunk of it by have a “launch” party, and that may not be the best use for your money.
Others try to spend as little money as possible, but this approach can also backfire. A new restaurant may pay lower rent for an out of the way location, only to find out that many potential customers won’t go in that area. A delivery service may buy a cheap vehicle only to find out it needs a lot of expensive repairs.
You hired or partnered with the wrong people
Now you may think that working with family and friends is a very good idea, because you trust their character. But in business, competence is crucial. Working with people close to you can get messy, and you can hurt your personal relationships as well.
You should also make sure you get professional services for things you can’t do on your own. For example, a lawyer and an accountant can offer very valuable advice especially when you’re just starting.
You price your product or service too low
Many new entrepreneurs seem to think that the best way to gain a foothold in their industry is to offer a lower price than their competitors. But that may not always be a good idea, especially when you don’t earn much for each sale.
Also, a low price may give your potential customers the impression that your product or service is not at par with what your competitors offer.
You didn’t advertise properly
The best product or service won’t sell itself. People need to know about what you offer before they can buy it. You have to tell potential customers about your product, and then convince them to buy it.
Remember, there is always a very good chance that your business won’t last for five years. In fact, some experts even believe that 8 out of 10 startups today won’t even last 18 months. That’s not very encouraging, I know, but at least you now know how you can avoid the same fate.