Starting up a business can be really challenging (which confirms that entrepreneurship is not necessarily for everyone) and if care is not taken, one would make a lot of mistakes and quit.
It is no more news that 20% of new businesses fail during the first two years of operation, and roughly half of all businesses do not survive past the fifth year. (U.S. Bureau of Labor Statistics). Most of the time, it is not because the ideas are bad o, but there are some avoidable mistakes the entrepreneurs who run (or would run) those businesses make. I know most of us might be familiar with some of these 'avoidable' errors made by some entrepreneurs.
20% of new businesses fail during the first two years of operation, and roughly half of all businesses do not survive past the fifth year.
Mistakes, they say, is an essential part of growing as an entrepreneur. We are even told to make our mistakes as early as possible. As much as these are very much correct, we must understand that making mistakes should be as limited as possible to make the entrepreneurial journey with less trouble! That is why we get mentors right? So here are some common mistakes most Startup Entrepreneurs make:
1. Over planning/ late decision making
A wrong decision is better than no decision! Most Entrepreneurs spend too long planning for their business. As much planning is critical to business success, starting a business is more of action than a carefully laid plan. Entrepreneurs become one in the process, not on the drawing board (or MBA school). Too much planning reduces your action-oriented activities. A good balance needs to be created between planning and action! And if you know you're an endless planner, get someone to do the planning for you..
2. Low Self-development / Over self-development
As a sequel to the first mistake, most Startup entrepreneurs do not develop themselves enough to meet the requirements of their business. It's said that a average CEO reads a book every week! To grow as an entrepreneur, you need to progressively acquire knowledge! I have once worked with an 'entrepreneur' who told me he does not read (almost at all) and it shows all over him like icing on a cake. So, it's quite certain, there is a limit to which you can build your business if you don't develop yourself to grow as an entrepreneur!
On the other hand, some entrepreneurs spend too much time on self-development. Some read as though all that needs to be done is reading. A balance is required here! About 80% of entrepreneurship books I've read are books owned by some of my uncles but the truth (sadly) is that their lives don't reflect those books at all. So, I wonder why they have so many books and their lives reflect so little of the contents of these books.
3. Lack of Good Book-keeping Practice
A good bookkeeping practice is important, no matter how small or lean your business is. It helps a lot in the future if you record all those little details as your business progresses. Out of my expectation, some people are still in awe anytime I tell them that I know almost precisely the profits I have made from each business I've done over years. I believe every (lean) entrepreneur should be able to do that! And that is why almost the only thing an investor would ask for is your financial statement. And if you cannot provide that, it will be lucid you don't mean business yet!
I remember a particularly small poultry business my mum ran in our house some years back. We thought we were making profits o (for like a year), until I decided to help her with the records and after some months, it was obvious that we were in loss! Record keeping helped us discover that. If you think you are outrightly not a record keeping oriented person, you can get someone to do it for you, but do not ignore it!
4. Most MSMEs Entrepreneurs Assume too much
Some startup entrepreneurs assume that there is enough market for their business to break-even, some assume that the business doesn't need to much money to start (after attending a lean Entrepreneurship class) and others assume they have all it takes to run the business among many others of such. But assumptions can be very costly! Especially in this business.
In entrepreneurship, your assumptions should be limited as much as possible. Do your research, and if possible, do not assume 'anything' at all! Research your competition, your market and even a feasibility study before you start the business and don't underestimate capital requirements for your business.
5. Not having a Mentor or Adviser
You need to know that as a startup entrepreneur, there are some people who have gone ahead of you and know better than you do! So even if this is the only thing you will do right, then you are good to go (with the hope that your mentor helps with other possible mistakes).
But you really do not want to make too many mistakes in your entrepreneurial journey and therefore you need a guide! And thanks to ONE Foundation for bringing to us a mentorship program that had helped many people realize the importance of having a mentor.
There are many other mistakes we can talk about, but I will stop here. Let us do well to take note of some of these points to make our journey quite hazzle free and reduce our entrepreneurial challenges.