Starting a business is an interesting experience. But a report from the US Statistics of Labor revealed that 20% of new businesses failed during their first two years of operation. And about 50% of all new businesses don’t survive the first 5 years. These statistics are scary. But if you are more strategic and proactive in your approach, your business will certainly stand the test of time. In this article, I will share some costly mistakes to avoid when starting a business.
Contrary to what people think, your money and business ideas aren’t enough to make your startup succeed. There is more to starting a business than money and ideas.
And if you don’t give attention to some crucial issues when starting a business, you may make rookie mistakes. And these mistakes could lead to the end of your business.
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So, here are 7 costly mistakes to avoid when starting a business;
#1. The Fear of Failure
Failure is part of the success equation. Every successful entrepreneur you see out there has experienced failure one way or the other.
Have it in mind that failure is normal in your entrepreneurial journey. And the fear of failure is one of the mistakes to avoid when starting a business.
In the real sense, there’s nothing bad with failure. But what you do after you fail is what really matters. So, embrace it when it comes, and don’t relent in your journey. Keep pushing until you achieve your goals.
The fear of failure is bad for any entrepreneur. It will prevent you from taking calculated risks and possibly affect your business growth.
#2. Not Having a Business Plan
Not having a business plan is one of the mistakes to avoid when starting a business. If you fail to create a business plan, trust me, you are planning to fail.
Every new business should have a business plan. It helps you create an effective strategy for growth, determine your future financial needs, and possibly attract angel investors.
Ideally, your business plan should include the cost of your company’s operation, the nature of your business, the needs you plan to supply, your customers, supplier, etc.
When you start a business without a plan, you won’t be able to give clarity to your ideas so that they can flow out. And that’s because the business ideas will still be mere thoughts.
Without a business plan, you can’t raise funds for your project or take the necessary steps to implement them. So, once you decide to start a business, the next thing you should do is to create a business plan.
Your business plan sets out the objectives of your business and how you hope to achieve them. It bridges the gap between the current state of your business and where you want it to be.
#3. Not Being Organized
Running a business isn’t as easy as it seems. You will be handling several things at a time. From record-keeping and marketing to managing resources. It’s like being a circus ringmaster. That’s why lack of organization is one of the mistakes to avoid when starting a business.
As a business owner, you must always balance several tasks at a time. And if you aren’t organized, you will start piling up tasks, losing paperwork, and you will end up spending your precious time searching for information that ought to have been available.
But if your business is organized, you will execute tasks effectively without wasting time. So, before you start a business, hone your organizational skills. It will help you save time, money, and energy.
#4. Inadequate Knowledge of the Market and Target Audience
One of the mistakes to avoid when starting a business is not knowing your market and target audience.
You don’t start a business and choose a niche because you see other people doing it. If you start a business based on that, the company will fail before it starts.
Before launching your startup, it’s crucial to study your market, understand the variables, and know your target audience.
Determine the competition in the market, the volume, and the initial entry barriers that could affect your business’s growth.
Once you study the market, take your time to learn more about your target audience. Know about their demography, what keeps them awake at night, the social media platforms they spend most of their time, etc.
Understanding these variables will enable you to come up with strategies that will help you capture a good portion of the market.
#5. Not Filing for Proper Legal Structure and Business Registration
One of the costliest mistakes to avoid when starting a business is not registering your business or filing for a proper legal structure.
Every small business has the potential to grow into a world brand. So, you have to factor that in while starting your business. And if you fail to file for proper legal structure, business registration, and protect your intellectual property, you will miss out on a crucial foundation for your business.
Unfortunately, correcting this mistake in the future may cost you valuable time, energy, and resources. And your startup could encounter a severe setback for this.
#6. Trying To Do Everything Yourself
This is one of the mistakes to avoid when starting a business if you want to be successful as an entrepreneur.
The concept of ‘jack of all trades, master of none’, doesn’t work in entrepreneurship. If you want to go far, you must work with other people. There’s no way you can do everything yourself.
Have a few employees, delegate responsibilities, get seasoned advisors on board to discuss your ideas, strategy, progress, and challenges.
If you have a few experienced people on your team, you are less likely to make mistakes that could affect your business’s future.
#7. Partnering With the Wrong Investors
One of the worst mistakes to avoid when starting a business is partnering with the wrong investors. I know as a startup, you will be desperately looking for investors to fund your business.
But your investors aren’t just your financial backers. They are the backbone of your business. And your first set of investors could either make or break your startup, so choose wisely.
Here are some of the signs of wrong investors;
- They don’t have any prior successful investments.
- They fail to tell you what they are actually looking for in a startup.
- A wrong investor may be so excited about your startup but won’t show any commitment.
- They discourage you from talking to other investors.
- They want to assume control of your board.
- Wrong investors always set unrealistic goals for your company.
These are the mistakes to avoid when starting a business. Take note and pay close attention to them for your next startup. Once you avoid these mistakes, your business will grow exponentially.