More often than not we hear a lot about how to be a successful entrepreneur and very little on what mistakes to avoid when starting in business.
Starting a business is always risky, and the chances of success are slim. Research on several entrepreneur businesses has revealed that, over 50% of small businesses fail in the first year and 95% fail within the first five years.
What contributes to the failure of 95% of small businesses and success of only 5% of the entrepreneurs? Chances are that the failure types are making one or all of the following mistakes. Read on to increase your odds of succeeding.
1) Giving up too soon
Many businesses fail because the entrepreneur thinks that by simply opening a shop or a website would lead to automatic success. But they soon realize that the path to success and growth is not smooth and they quickly throw in the towel. Starting a business is tough and every ounce of physical and mental effort, attention, thought, fight and moral fiber that you have may be called upon. Commit yourself to your dream of owning a business regardless of what has to be endured along the way. Hung on, persevere until you succeed. Once you attain success, you will conclude it was worth it.
2) Failure to market your business
Failing to make marketing of your business a priority will definitely lead to the fall of your company. Find suitable ways of generating leads to your business and then how to convert those leads into paying customers. One of the simplest ways to get leads is though an opt- in form like Aweber on your website through which visitors to your site will give you their names and email addresses. Once you have their emails, you can then follow up and convert them into paying
3) Lack of infrastructure
In the initial period after starting a business and money begins to flow, most entrepreneurs will naturally seek further growth and put more money in revenue producing areas like new markets and new products. Little or no money is spent on organizational framework and back office support. What follows is lack of information systems necessary to provide the entrepreneur with information and data he needs to run the day to day operations of the company and to make decisions about the current and future strategies for the business. No one notices the small warning bells until the company posts huge losses or when on the brink of bankruptcy.
Solution: As an entrepreneurial start up, have the infrastructure; effectively deploy your human resource, delegate and focus on the bigger picture, appreciate and recognize your employee’s contribution, develop long term planning and finally effectively implement technology.
4) Not taking action
If you do nothing, nothing happens. Create an information article about your product, make a call to a customer or business partner, follow up on a lead or launch a new product. Take the right action, at the right time and in the right order. This will build momentum and momentum builds success.
5) Being comfortable
Initially, you will experience growing pains and the idea of going back to the comfort zone of being employed or reliance on others is too tempting. Most entrepreneurs go back to what feels comfortable. To succeed, stretch your comfort zone .Get a mentor or business coach who will push you to succeed and also encourage and support you. Surround yourself with people who will motivate you to achieve your goal of owning a business.
6) Lacking in humility
Many entrepreneurs feel that they already know everything about business. This confidence is arrogance and ignorance.
We live in an information age and we do business in a global economy. New technology and mobility of capital and other resources means that things change faster than ever before. Failure to stay alert and open to new business approaches and idea could spell doom for your business. Starting in business is a journey, be open to learn from others by attending seminars and workshops on the areas that you have skill gaps.
7) Lack of a strategic plan
It is easy to be bitten by the entrepreneurial bug but difficult to chart a clear and distinct path that will competitively position your company for the future. This lack of a strategic plan leads most entrepreneurs to take any road which more often than not leads to the failure of their businesses.
Develop a strategic plan to help you decide where you want your company to go and how it is going to get there.
8) Ignoring the 80/20 rule
Pareto’s rule states that 80% of your results will come from 20% of your efforts. Most entrepreneurs are normally busy paying attention to matters that consume a lot of their working time making them feel busy but in the really sense contributing little to the company’s growth. Delegate or outsource ,this will allow you time to focus more on activities like marketing, launching new products, and creating new information on products. These activities add more value to your business and contribute 80% to its success.
9) Flaunting legal requirements
There are laws and by laws which govern businesses in every environment for example local authority licenses ,business registration requirements ,tax registration certificates and the like .It is important to start obeying these laws early in the business to avoid tax backlogs and legal actions by the revenue authorities. This also helps in developing positive business discipline which is good for your public relations. When the business grows you will not have “skeletons” in the closet.
10) Poor cash flow management
In the early periods of starting a business, most entrepreneurs spend so much time trying to get the business up and running that they neglect to monitor the money coming in and going out. When the business starts experiencing rapid growth and cash is flowing in, they also do not set aside any money for the rainy days when the sales decrease. These are serious mistakes that lead to major cash flow crushes.
As a rule of thumb, stay lean and mean, trim your expenses to the bare minimum and run your company as efficiently as possible.
It is tough to be a successful entrepreneur but with the right information, the right attitude and taking action, you can be one of the 5% of the entrepreneurs who succeed and thrive.
