So you’re thinking of starting a business? That’s excellent news! Becoming your own boss presents a challenge. But it’s also equally exciting. Not only are businesses the lifeblood of the economy, but it presents an opportunity to follow your dream.
If you successfully pull it off, who knows what might happen? You might enjoy great success and create something truly special and unique. But, on the other hand, the venture might flop with you ending up in debt.
That’s why some say starting a business is a coin flip, especially in today’s business climate, where uncertainty reigns supreme.
But you need several things if you want your business to be successful. On the one hand, there are things to consider before starting a business. Conversely, you must avoid the crucial mistakes that will ensure your business’s downfall. We hope you get off to a great start. Therefore, we want to shed light on the five mistakes every entrepreneur must avoid when starting a business.
So with all that out of the way. Let’s get into it.
Not Having a Business Plan
Planning is critical when starting a business. And there’s no better planning than having a business plan. Every successful entrepreneur will tell you that a business plan is the most crucial document.
A business plan contains all the necessary information on how you hope the business will run. It includes market analysis, strategies, financial planning, your product or service, etc.
Without this document, it’s impossible to gain funding for your business. Even more so, you fail to understand how to make money and operate your business without a business plan.
Naturally, not having a business plan is the first mistake to avoid when starting a business.
Doing Everything Yourself
We salute the people who launch their businesses from start to finish. It’s truly a remarkable achievement. Logic dictates that you need help from at least one person when starting a business. In most cases, prospective business owners seek legal help when starting their businesses.
Unless you know the ins and outs of business structures, knowing how to protect yourself legally and pick the correct business entity at first is impossible.
This is just one of many examples. Therefore, prospective business owners should get as much help as they need when starting a business. Not only do you save time by allocating extra hands to things you’re not necessarily well-versed in, but everyone needs help first.
So it makes little sense to act tough and do everything independently. Instead, seek help whenever you need it!
Picking the Wrong Partner
Some business owners partner up with close friends or family members when starting a business. While this isn’t necessarily bad, there have been plenty of examples where businesses fail due to poor leadership and synergy from the leading people.
Make no mistake; picking the wrong person to be your business partner is a recipe for disaster. Therefore, prospective entrepreneurs should take all the time they need to ensure they make the right decision on who to partner with.
While on that note, partnering with the wrong investors is an equally disastrous mistake to avoid. Investors are there to offer funding in exchange for future profits or a stake in the company. If you’ve seen an episode of Dragon’s Den or Shark Tank, you get the idea of how predatory investors can be.
Very few of these businesses make it due to the extreme pressure the investors put them under. So while we’ve included these two mistakes into one, it just shows how damaging this mistake can be.
Going on a Hiring Spree
Some think becoming a business owner means sitting in your chair while everyone else does all the work. Unfortunately, the reality couldn’t be further accurate.
As an entrepreneur or business owner, you must sacrifice free time to ensure your business is successful. That means doing all the work, not hiring contractors or employees.
While you can hire a few people, going on a hiring spree is a mistake that can put you in a lot of debt. So before hiring an entire office, evaluate your finances and resources and whether you can support such a decision.
Mishandling Money
The last mistake is an obvious one. However, it is often the mistake that ruins businesses. Most startups and businesses don’t have the cash flow of an industry giant. So while they hope to get there, they must also learn how to manage capital and cash accordingly.
This is one of the biggest challenges for aspiring entrepreneurs. Making a mistake will probably result in disaster. Therefore, entrepreneurs must learn how to manage money and ensure all parts of the business are covered.
For example, there’s no need to hire excess workers when you don’t have an accountant. In addition, giving yourself too big a salary is one way to put extra strain on your limited capital.
Conclusion
Starting a business is far from easy. Prospective business owners must look at the entire picture to sense what it means to be successful. While this article gives you five mistakes everyone should avoid, that’s not to say there aren’t others.
It’s your responsibility to do the due diligence necessary to ensure the success and survival of your business.
Author Bio
Erik Bergman co-founded Catena Media and helped grow it to over 300 employees and a $200 million valuation before stepping away to start Great.com, an iGaming organization that donates 100% of its profits to environmental charities. In addition to running a successful online business, Erik hosts the Becoming Great podcast and shares entrepreneurship tips with his more than 1 million social media followers. He contributes to sites like Entrepreneuer.com, Business Insider, Foundr, and Forbes.