Nobody said starting your own business would be easy. There are so many moving pieces, and you are responsible for everything. The pressure of solo entrepreneurship can lead to stress, setbacks, and tough decisions. There are no guarantees that you’ll make it: in 2019, the Bureau of Labor Statistics reported that only 20% of businesses keep their doors open past the first year, and 50% of those who do stay open close in their second year. Opening and sustaining a business requires funding, timing, and faith. While we can’t give you those three things, we can share some of the hard-won lessons from businesses that didn’t make it. Here are the top 10 common mistakes business owners make, and how to avoid them and survive your first crucial years.
- Thinking you can do it alone.
To be an entrepreneur means being committed, dedicated, and independent. You see yourself as a jack of all trades and are often keen to do everything on your own. Waiting to hire staff or to outsource responsibilities could be catastrophic, though: as you become busier and busier, you might overlook important details, or let necessary tasks fall by the wayside. Hiring, training, and retaining quality staff before it becomes necessary is a must-do for all new business owners.
- Taking too much advice.
When you announce your plan to start a business, everyone is going to have advice for you. Family, friends, neighbors, colleagues… you name it, they’re going to have something to say. Generally speaking, ignore it all. Seriously! Unless the advice is coming from someone who is financially invested in your business or who you truly consider a mentor, accept it gracefully and then disregard it. This is your business, and your life. Taking advice from someone lacking expertise could cause you to doubt yourself, or even to make a catastrophic mistake.
- Living outside your means.
Do not live outside your means or your business will fail.
People say that “the first year is the future year” – the foundation upon which your business can thrive, or dig itself into a hole, so don’t send your business to an early grave with overspending. Starting a business is a financial investment, but you shouldn’t feel pressured to purchase high-ticket items when there are reasonably priced alternatives. You may feel confident enough in your vision to justify it, but your best bet is to live within your means for the first few years.
- Cutting the wrong corners.
Frugality is important when starting a new business, but there are some things you just can’t cut corners on. Insurance is one of these things. Monthly premiums may seem like a burden, but they are significantly lower than the legal fees or repair costs that you might be hit with if you don’t have insurance. Hiring a professional bookkeeper is another necessary cost: miscalculating taxes can lead to hefty penalties and late fees, and it’s important to know how to budget for your quarterly and year-end tax bills.
- Selling yourself short.
Getting ahead of yourself and overspending can spell disaster, but so can not thinking big enough. You need to be prepared for success. Imagine that your business thrives and you’re asked to produce more of your product or provide more of your services. Would you be able to? Successful entrepreneurs have a strategy for scaling up when (not if!) their success demands it.
- Setting the wrong goals.
Goal setting is incredibly important, and the types of goals you set can make all of the difference! By following the SMART goal strategy you can formulate goals that are specific, measurable, attainable, realistic, and timely. Having organized goals can help you avoid burnout – you’ll have reasonable expectations and a clear way to meet your goals.
- Forgetting your role as entrepreneur and salesman.
It’s easy to dream of being the next Steve Jobs, but in the beginning stages of your new business, you must first work as a salesman. The product? Yourself. Someday you might have the same name recognition as Apple’s CEO, or Amazon’s Jeff Bezos, both of whom can walk up to any table and have a seat. You don’t automatically earn a seat at the table: you first have to successfully pitch yourself to your potential clients or collaborators. Remembering that should encourage you to bring your A-game to all meetings, business or casual.
- Ignoring your victories.
Building a business from the ground up is hard work. It means putting in early mornings, late nights, and days away from family and friends. It can be emotionally and physically exhausting. To avoid burnout before you even get your business off the ground, it’s important to acknowledge and celebrate your victories, no matter how small they may seem.
- Considering quitting.
I’ll say it again: entrepreneurship is no walk in the park! Selling yourself and your product, playing the role of manager, salesman, CEO, and innovator all at once, is a lot of pressure! Many businesses don’t survive – but in order to make it, you can’t even begin to entertain the idea of quitting. Steve Jobs famously said, “I’m convinced that about half of what separates the successful entrepreneurs from the non-successful ones is pure perseverance.”
- Fearing failure.
Similarly, you can’t act out of a fear of failure. This results in guarded, hesitant actions – and would you invest in someone who didn’t believe in themselves? Fearing failure, while completely understandable, can cause you to second guess yourself and make rash decisions, which could end up damaging your business.
The Long Game
When you’re running your own business, you’re playing the long game. The first few years are survival mode, and unfortunately it doesn’t get much easier after that! Surviving past the first few years is a testimony to your resilience, authenticity, strategy, and skills – and the success of your business will always be worth the effort.