Recognized as the lifeblood of the global economy, entrepreneurs operate among various industries. No matter the size and scope, an entrepreneur stands behind every business. McDonalds, Coca Cola, Walt Disney, Apple, Microsoft, and more – you name it, there is an entrepreneur behind it.
However, the reality is that while some entrepreneurs go on to bask in the glory of their success, others fail in their efforts. Findings report that 50% of businesses do not make it past the first 5 years, and 9 out of 10 startups will eventually fail. These numbers may seem discouraging, but it does not mean that you should shy away from the entrepreneurial path.
With hard work, determination, fresh ideas, a desire to learn, and genuine passion, you can build your business into a successful empire. You merely need to understand what it takes to become an entrepreneur and what pitfalls to dodge as a first-timer.
Having said that, here are the top 5 mistakes first time entrepreneurs make (and how to avoid them):
Getting Into the Entrepreneurial World for the Wrong Reasons
A lot of individuals get into the entrepreneurial world for the wrong reasons, one of the most common being the desire to be their own boss. While putting in your own hours and having control over the type of work you do is not necessarily a bad thing, it can lead to problems in the long-run if you are not a business realist.
Start with solving an issue that affects you personally. Whether it’s creating new software that smoothens out a process or solves a social issue that you care about such as illegal dumping, if you create a business around what you enjoy doing, it will make the journey a lot less tiring.
The fact of the matter is that you are not going to be relaxing on an island sipping cocktails while your business runs itself. Your employees, partners, consumers, media, etc. – all of these people are your boss. You may be the one to provide directions but eventually, you are held accountable for your success or failure. The sooner you realize that, the easier it will be.
Not Keeping an Eye on the Bank Balance
It may sound unlikely, but not keeping an eye on the bank balance happens way more often than you might think. It can lead you to think that you have got more money to spend than you actually do. Yet, how does this happen?
Often times, if you only keep track of cash flow and fail to calculate profits, you may be faced with a situation where cash runs out. This is because profits add to the cash flow and keep your business afloat, so ignoring them can only lead to trouble.
Likewise, you may have revenues and profits but being your own boss means continuously investing in your business (supplies, equipment, promotional advertising, etc.) if you want to reap the rewards.
Forgetting to Lock Down Your Intellectual Property
Intellectual property refers to creations of the human intellect such as patents, copyrights, trademarks, and trade secrets. When starting your own business, it is imperative that you lock down your intellectual property for the good of its overall health.
By doing so, you are the rightful owner of your innovations, which the competition cannot copy or steal. Similarly, if they do try to imitate or file a patient over yours, they could end up owing enormous fees.
Another reason why it is smart to lock down your intellectual property is third party license. Should you come into contact with a third party who wishes to license your innovations, this can create a new source of revenue for your business.
Making Poor Hiring Decisions
The recruitment process is one of the most important aspects of running a successful business. Every boss knows that it is essential to hire people who have the proper skills, experience, tenacity, and intelligence to thrive at work.
Unfortunately, poor hiring decisions are made from time to time. The need to fill a job position quickly, the failure to check employee references, and the lack of talent intelligence – all of these reasons and more can lead to a bad hire. Essentially, that one bad hire can cost you big, both financially and reputably.
To avoid this from happening, it is your responsibility to hire the right people in the right job positions. If you need assistance, a recruiter specializing in professional services can help you find talent in that industry. Although it may seem stressful and time-consuming at times, it can actually save you a lot of headaches in the future.
Not Focusing on Sales Enough
Sales, sales, sales! It cannot be stressed enough – especially at the start of a newly-launched business with a mission to drive productivity and a vision to achieve desired goals.
Sales actually helps to create a brand relationship between you and your consumers. It is how loyalty and trust are built, both of which can have a vast impact on the growth of your business through increased brand awareness. In turn, brand awareness equals sales, sales equals revenue, and revenue covers expenses. With social media readily available, businesses can multiply their reach through Instagram or Facebook and build up a following base that’s loyal to them.
This is an important cycle and one that requires a great deal of focus with precision, ability, and determination. On the contrary, not focusing on sales enough can lead to unstable operations, failure to achieve maximum results, and missed opportunities for growth.
Micromanaging for Too Long
In business, micromanagement is a type of management style in which “a manager closely observes and/or controls and/or reminds the work of his/her subordinates or employees.”
Generally speaking, micromanagement has a bad reputation because of the lack of freedom it allows in the workplace. And while it can useful at times, it mainly causes frustration among subordinates or employees.
This is because every one of us has a unique type of work style (organized, data-oriented, emotionally-oriented, integrative, etc.) and we may take different paths to arrive at the same conclusion. If you micromanage your team for too long, it can lead to bitterness and damage to trust.
An effective alternative to micromanagement is documented workflows. This involves recording given tasks and specific instructions to follow for the purpose of reassuring you that things are getting done accordingly. As an added bonus, your team can maintain some degree of autonomy to feel independent.
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