If you’re planning to start a business, you’ll find there are way too many opportunities to learn the hard way. Inexperienced entrepreneurs end up hurting themselves financially when they start a business and fail to avoid common mistakes.
Experience is a great teacher. And someone else’s experience is an even better teacher. One way you can avoid unforced errors in business is to learn from the painful lessons of other business owners.
Here are some common startup mistakes.
1. A Failure to Understand Your Clients
If you’re considering a business-to-business (B2B) operation, be certain you’ve walked a country mile in your potential client’s shoes before you start dispensing advice about how to travel.
You might think you’ve found the perfect market. You might believe you understand exactly what people in a certain line of work truly need. But unless you’ve been in that line of work, you should think again.
Zach Clayton is the owner of Three Ships, a digital marketing company. He says he spent way too much time showing clients detailed reports about how his company delivered a strong return on investment (ROI).
One day, a client company offered him a role as an interim chief marketing officer.
“I had no idea how hectic and overwhelming that job actually is. You’re in marathon management meetings. You’re arguing with the head of sales about the right lead goals. You’re hiring a new PR firm for the West Coast,” he says. “I realized clients were too busy solving other problems to go three levels deep on understanding all the technical work we do.”
Now, he operates with clients on much simpler terms.
2. Allowing the Perfect to Become the Enemy of the Good
Not every project is going to launch perfectly. Accept that while you’re new at this.
Entrepreneurs struggling for a first-class level of presentation in a new release or product launch often allow themselves to say no to something that is good, but not perfect.
Sure, your brand name is on the product and you certainly want to leave a good impression. However, you’re also faced with competition. Some of your competitors in the same space may capture market share because they don’t allow themselves to be caught up in perfection.
If you have a great product, go ahead and release it. If there are some wrinkles that can be ironed out, do so in a way concurrent with your launch. Don’t lose money because you’re stuck on absolute perfection.
3. A Failure to Prepare for the Regulatory Environment
Strictly speaking, your business will have two sets of enemies. The first set of enemies will be your competition. The second set of enemies will be the various regulatory agencies that insist on forcing you to spend money to comply with current laws.
Many entrepreneurs go into business fully aware of the first set of enemies and are ready to tackle them. But many forget about the second set of enemies and end up paying costly fines or, worse, being shut down for a while.
Hire a good attorney to be sure your business is compliant with prevailing regulations. This is one area where you must be proactive. You simply can’t afford to wait until something bad happens and then hope to fix it after the fact.
If necessary, seek the proper training for your employees so they can perform their jobs in line with government standards, and able to maintain OSHA compliance.
4. Being Too Stingy
It’s easy to fall into the “cutting corners at any cost” trap, especially when you’re first starting out and want to stretch each dollar as far as it will go.
The old adage about it taking money to make money is still valid. You have to spend money to earn money. Get used to the idea.
That’s why you should seriously consider opting for a “go big or go home” strategy when it comes to new purchases. Sure, you can buy refurbished equipment and second-hand, lower quality hardware and still launch your business effectively.
But you should also think about the future cost. If that equipment depreciates faster and needs to be replaced sooner than higher quality equipment, have you really saved any money?
Also, what’s the opportunity cost associated with the extra effort required to ensure older equipment functions properly?
In many cases, your best choice is high quality. That doesn’t mean you need to spend an extra 50% just for a brand name, but you want to ensure that you’re getting a great product for the money. Many entrepreneurs don’t do that, and regret it later.
Starting a business can be a wonderful, fulfilling experience. Be sure you do it right and avoid some of the common mistakes made by your fellow entrepreneurs.