In our current market, entrepreneurs are starting new businesses at an increasing rate. There are some common pitfalls and mistakes newly formed businesses make in the early stages:
- Going it alone. One word – scalability. If you are the only person involved, it is next to impossible to grow beyond the capacity of You. Create an org chart with all of the roles that a company has…marketing, sales, finance, HR, deliverables, quality control, compliance, insurance, etc. Now put your name in every one of those boxes. And, are you skilled in every one of those areas? The Solution: Make sure there’s enough margin in your pricing to enable you to bring in other people. Clients generally don’t mind outsourcing as long as they can still get face time with you, the skilled professional who’s managing the project.
- Asking too many people for advice. It’s always good to get input from experts, especially experienced entrepreneurs who’ve built and sold successful companies in your industry. But getting too many people’s opinions can delay your decision so long that your company never gets out of the starting gate. The Solution: Join a Peer Support group that can act as a board of advisors for your company such as our Entrepreneurs Group or E Group for Start-Ups. A consistent feedback loop from other entrepreneurs and professionals can help you make the tough decisions with confidence.
- Lacking a business plan. While many entrepreneurs We’ve seen the negative effects of seat-of-the-pants decision-making. We’ve worked with other entrepreneurs who are afraid to pulling the trigger. The Solution: There are so many tools and apps out there to create the plan. There are different plans for different needs. One may need to be developed for capital, which is a more time intensive and detailed effort. Another
type can be modular where you focus on what will provide the greatest benefit for the company. Running a company without a plan and metrics is like trying to find your destination in unchartered territory without a map and compass. - Having too little or too much capital. Two sides of a problem, Money. Many start-ups assume that all they need is enough money to rent space, buy equipment, stock inventory and drive customers through the door. What they often forget is that they also need capital to pay for salaries, utilities, insurance and other overhead expenses until their company starts turning a profit. The other side of the problem is raising too much capital. Companies hiring too many people too soon and wasting valuable resources on trade show booths, parties, image ads and other frills. They don’t bank enough for a rainy day such as a recession or pandemic shutdown. The Solution: Utilize a business coach and financial professional who can help you calculate the start-up costs, create a budget to include an emergency fund, etc. so that you can monitor growth and adjust accordingly.
- Not understanding how marketing and sales work together. The balance of capital and resources in marketing and sales can create havoc in a start-up. There are many who pour money into a spray and pray marketing approach. The approach will fail if there is not an effective sales plan and process on the other side. Additionally, the world of marketing a business grows more complex everyday. What works for your business? Simple question with a complex answer. Do you have business development experience in your current market? Coming from the large corporate world with the complex sales to large markets is vastly different from the entrepreneurial sales process. The Solution: See #2. Before you spend time, money, and resources into your marketing and sales efforts, develop a plan through other professionals who have been there and done that.
One thing for sure is that you will make mistakes along the way. We want businesses to be successful, we help business owners navigate through the challenges of starting a business so that their mistakes are not so large that it takes their company and dream out from under them.