Starting your own business requires a lot of hard work, regardless of the overnight success stories we all read about online. In addition to having enough capital, you must recognize and avoid common start-up mistakes to ensure your small business survives the early years and eventually thrives.
As a small business owner, I learned what mistakes to avoid through trial and error. Over time, I turned my fledgling small business into a prosperous side business idea that has helped me create some great passive income.
Avoid these common mistakes made by new entrepreneurs to ensure the success of your business:
1. Starting a business in a new field
Trying to launch a business in an industry or area where you don’t have any prior experience can quickly lead to failure. Before you make the leap into starting a business, make sure you focus on your talents, passion and experience to pinpoint the right business for you. Combine your enthusiasm, experience and knowledge with a solid, organized business plan if you really want to succeed.
In my case, I took advantage of my previous retail experience in computers and my love of small electronics to launch a re-selling business online.
2. Trying to start your business on your own
Although this concept can work well in the beginning, trying to go it alone will only hamper your efforts to grow and expand your business. Initially it makes sense to cut costs by working alone, but soon enough you’ll need to make intelligent, calculated decisions about working with like-minded individuals to help your business grow.
Trying to track financial details slowed me down, so I brought on an accountant. Next, I hired a marketing consultant, who assisted me with advertising and expanding my business. In an ideal situation, you’d find the right business partner who complements your skill set and takes on additional responsibilities.
3. Not adapting to changing business conditions
I started off with a fairly detailed business plan. But I soon realized that if I stuck to that plan completely and didn’t make adjustments as the industry and the market changed, my business would fail.
Learn to adapt as you grow your business. Don’t be afraid to change your target market or scrap unsatisfactory marketing initiatives. Recognize the fluidity of your small business, focus on what positively and negatively affects your business plan, and adjust your growth model accordingly.
One of the best ways to help yourself succeed is by focusing on positive cash flow. To consistently achieve this goal, you must adapt to new market conditions, including the presence of new competitors in your industry.
4. Being deathly afraid of making mistakes
You engage in a great deal of risk when you launch a small business, and most of it involves your personal finances. However, you can’t be afraid to make mistakes, even if they cost you money.
Instead, learn to quickly identify errors in judgment, determine why they occurred, and make immediate adjustments so they don’t happen again. Learning from your mistakes and moving forward after you make them can make you more resilient over the long-term.
Lastly, not only can it help with increasing revenues, but you can also save on expenses by being more daring. For example, some of the best cost cutting ideas for small businesses involve taking a risk or changing the status quo for how your company operates.
5. Avoiding risk
Continue to take risks as your business evolves. As one of my businesses grew, I wrote a personal finance book and self-published it for $2,000. The initial sales of the book were soft, and for many months, it appeared that I spent the money in vain.
But over time, the book became profitable and I made that money back ten times over. If you encounter an idea to expand your business that feels “risky,” research the pros and cons of the concept. If the idea still seems viable after your analysis, go for it!
6. Quitting if you run out of cash
No successful entrepreneur ever let money stand in the way of achieving business goals. If you have a great business idea, a passion for the concept, and you’re willing to work hard, you can always find ways to fund your business proposition. Cut costs in your everyday life to free up capital, apply for an SBA loan, approach angel investors, or even utilize some of the best small business credit cards.
If you can’t find funding, you don’t have to give up on the business idea altogether. Timing also plays a role in business success. It might make sense to start more slowly, and to put off aggressive expansion efforts and attempts to find additional funding until your business begins to show a steady profit.
If you’ve got the entrepreneurial spirit, harness it! Starting a business could help you generate income, and it might even lead to quitting your day job.
Someone once said, “you’ll never get rich working for someone else.” But you also won’t become successful if you don’t take some risks, ask for help, and adapt to an ever-changing business climate.
What are some of the biggest mistakes you’ve made while launching your small business?
David Bakke is a small business owner and contributor for the personal finance website, Money Crashers, where he shares tips for money management, entrepreneurship, and retirement savings.