Starting a new business is exciting but can also be very overwhelming. This paraphrased article from Entrepreneur discusses 10 mistakes to avoid when starting a new business.
1. Not having a plan of attack.
You don’t need to have a formal business plan – but you still need a plan. While the big-format business plan is growing obsolete, Sujan Patel, founder of several startups. “You don’t need a formal 20-page business plan to successfully plan a business. You need to know who your customers are, what you are selling and what people are willing to pay for your product or service.”
2. Focusing too much on the little stuff.
“First, you need to get your business off the ground,” says Steve Tobak, founder of Invisor Consulting. While this directive may seem obvious, new business owners can get really bogged down by the details. Don’t do this. By getting sidetracked focusing on things like how your business cards look or the design of your logo, founders are wasting valuable time. Instead, concentrate on tasks that will help propel your business to the next level.
3. Not worrying about money.
Be optimistic – just not about money. “There’s a very good chance that your company will run out of money before it makes any,” cautions Tobak. “Know how much cash you’ve got to run your business, what your burn rate is and make sure that you have a plan to try to get more before you run out.” Too often business owners scramble to raise funds when it’s already too late. Create a financial plan, detailing milestones and how much money it will take to reach these goals.
4. Undervaluing what you’re selling.
Whether you’re selling a product or service, set the price at what it needs to be to make a worthwhile profit. Cynthia Salim, the founder and CEO of Citizen’s Mark, a line of ethically-sourced professional blazers for women, set the starting price for her product at $425 after considering the labor and material costs for her line. “The price is what it needs to be,” Salim says. Patel also points out that “as your business evolves continue to adjust your price points.”
5. Ignoring customer service.
With so many of our business transactions happening over the Internet, it’s easy to forget that customers are people who are way more likely to return to your website if they have a good experience. “Make sure you have some way of interacting with the people visiting your site,” Tobak says. “Whatever domain — through live chat, survey, email or phone.” Also, monitor social-media sites for brand sentiment and check out review sites like Yelp to see who isn’t happy with his or her experience and reach out.
6. Giving away too much and getting nothing in return.
Before you’ve established credibility as a seller or an expert, offering something for free can turn into a conversion and long-term customer, especially for those entrepreneurs focused on offering services. However, the cost of free product can add up, so think of offering something useful and intangible in exchange for a customer’s email address, such as a free ebook, advises Joel Widmer, the founder of Fluxe Digital Marketing, a content-strategy firm.
7. Spreading yourself too thin on social media.
When you’re starting off with marketing and building your brand, test out one or two main social audiences where you know your audience is and can build a customized audience with a small budget. Don’t blow your advertising budget at the start. Facebook and Pinterest tend to be better for product sales. LinkedIn is a better field for a business personality trying to build his or her own brand, explains Widmer.
8. Skimping on early hires.
Entrepreneurs rush the hiring process to quickly fill positions in order to scale their business. But by going down this route, founders run the risk of issues down the road, including a mismatch in skillset and business needs, a personality that doesn’t bode well with the culture or a lack of commitment to the company’s mission. So, when hiring look for people who have the skills you don’t and embody the qualities you respect. “The first five hires will set your company’s temperature for the rest of its existence,” Patel emphasizes.
9. Underestimating the obsession and drive it takes to succeed.
You’ve read a lot about the importance of work/life balance – forget about it. (At least for the first year or two.) “Don’t worry about time,” Tobak says. “Big ideas do not come when you are trying to manage every minute of your time. They don’t come when you are multitasking. They come when you are focused on one thing. Let everything else fade to black.”
10. Thinking that everything is one size fits all.
Just because a product or strategy has worked for one company doesn’t mean it will work for you. Have a healthy degree of skepticism about what you read and see successful elsewhere, Patel recommends. If you can test your product using minimum financial and resource risk, then do so.