by Mari Tautimes, author of “#KeepGoing: From 15-Year-Old Mom To Successful CEO And Entrepreneur“
More than 5 million people became entrepreneurs in 2021 – a total that smashed the single-year record for new business applications by about 1 million.
But hovering over that tide of entrepreneurial optimism is some historically discouraging data: about 20% of small businesses fail within the first year and 50% fail within five. If you’re among the many who recently started a business or are considering it, there are common mistakes you can avoid.
I think most leaders don’t realize that there are inevitable ceilings they are going to hit along the way. And if they aren’t developing leadership abilities to help them first recognize when it’s happening, and they don’t have the skills to break through those ceilings, they’ll get stuck and possibly not survive.
Entrepreneurs make the following common mistakes when starting a business, and here are ways to avoid them:
Failing to do your homework.
Some people think they’ve got a great business idea, but they may be acting more on an impulse than a reasoned argument for success. Understand your industry. Go the extra miles to analyze the market and what you’re up against. If you begin your startup without knowing your competitors’ history and mission, it could result in your failure.
Trying to do it all yourself.
Many new entrepreneurs have a tendency to avoid hiring in order to keep costs down. But even if it’s financially prudent to hold off on hiring in the early stages, it’s draining to go it completely alone. A big mistake many entrepreneurs make, is not surrounding themselves with wise counsel, such as trusted advisors or a mentor with whom they can discuss strategy, ideas, and challenges. You can incentivize them for the future while getting helpful feedback that could prevent costly mistakes.
Not establishing, or adhering to, a budget.
One would think this is fundamental to starting a business, yet many entrepreneurs wing it from day one, and that approach can lead to disaster. If you don’t know what your business budget is, you’re going to feel overwhelmed and lose money quickly. To plan a budget and stick to it, the first step is to create a spreadsheet that can track your expenses and income. Getting a friend or accounting expert to help is also a good idea. The bottom line is being honest with yourself.
New entrepreneurs initially tend to hire friends, family members and kids in their teens or early 20s, but usually none of those hires can help take the business to a higher level because they don’t have the skills, experience or drive. This can kill a business even before it gets started.
To improve hiring, I suggest:
- Creating a detailed job description to attract talent that fits;
- Asking questions in the interview process designed to learn how the candidate handles challenging situations;
- Analyzing a candidate’s growth potential based on their skills, experience and personality;
- Determining if they’re a culture fit.
Ultimately, you have to delegate in order to elevate the company.
Even if you spend years improving your product, your startup won’t take off if you don’t know how to market it properly, especially in the digital age. Poor marketing keeps good products and services from being successful. Tell the relevant audience about your new product by using social media marketing, which is free and can help you reach a wide audience. Learn how to write compelling content, feature your products in videos, and how to generate leads through various forms of communication.
Mistakes are inevitable for the new entrepreneur. The most successful ones learn from them and improve their practices. Test new ideas, acquire feedback and pivot as necessary.
Mari Tautimes is the author of “#KeepGoing: From 15-Year-Old Mom To Successful CEO And Entrepreneur“. She rose from administrative assistant to CEO of her family’s businesses and sold them for $16 million. An entrepreneur for over 20 years, Tautimes is a speaker, trainer, EOS Implementer® and mentor, sharing her story of perseverance and success to help others create fulfilling lives.