Becoming a successful entrepreneur takes plenty of smarts, planning, and a dash of luck. While there's never a dull moment, entrepreneurship isn't as glamorous as many people assume.
You have to be committed to continuous learning through reading the right books, engaging with mentors and coaches, and through your own experiences.
Making mistakes is part of the process. However, some mistakes can be fatal to the business.
That's why it's important for a smart business owner to learn from the mistakes of others.
Let's explore some of the most damaging common mistakes entrepreneurs make.
BEING OVERLY CONFIDENT WITH YOUR BUSINESS IDEA
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Starting a business requires some confidence in your abilities. However, many business owners get so overly confident about their business idea that they fail to conduct proper research and write a business plan. Not conducting research to determine the viability of your business idea sets you on the wrong path right from the beginning.
If your business idea isn't viable, nothing you can do will make it so. Even investing more money won't save such a start-up.
Take the time to conduct some research to establish the demand for your product in the market and the competition you are likely to face.
Next, write a business plan. Your business plan doesn't have to be long - even two pages will do.
PICKING THE WRONG BUSINESS PARTNER
Having a business partner can propel your business towards success. After all, two heads are better than one. A good choice in a business partner can give you access to a wider range of networks and expertise and more financial muscle - boosting your chances of business success.
In addition, a business partner gives you another perspective which can be crucial when making important decisions. You also offer each other emotional support to weather the tough periods of the entrepreneurship journey.
A bad business partner, on the other hand, can easily bring down your business.
If you have different visions, values, and goals, you'll often have disagreements that can eventually kill the business. In selecting a business partner, always vet their skills and experience, their personal values, and financial capability. Don't make assumptions - carefully "interview" potential partners to gauge how well you fit with each other.
HIRING CHEAP LABOUR TO CUT COSTS
At face value, it makes business sense to hire the cheapest people to your team. However, making hiring decisions based on cost can also backfire on you. Cheap labour is cheap for a reason - they're likely to be unskilled, inexperienced, and unreliable.
Highly-skilled and experienced employees expect to be paid well for their services.
That, however, doesn't mean that you should hire unnecessarily expensive employees.
Look at what the average market rates for particular roles are in your area and try to offer competitive salaries. The more skilled and experienced the employee is, the more you'll have to shell out. To find the right person for the job, think about what they'll be doing. What will their day-to-day tasks look like?
What part of your strategic plan do they fit into? Use this information to write a detailed job description. When interviewing, ask questions that help you gauge the candidate's experience, skill, and fit. Having strong team members is key to sustainable business success.
OVER ANALYSING YOUR IDEAS
While some entrepreneurs fail to plan adequately, others get caught up in over-planning - which can lead to analysis paralysis.
This makes it impossible to make quick business decisions and seize opportunities as they present themselves.
Analysis paralysis is the cause of many project delays, seemingly endless planning sessions, and slow movement between production stages.
To be successful in the cut-throat business world, entrepreneurs need to be decisive. Spending too much time gathering information can easily turn into stalling.
Accept the fact that no matter the amount of research, you can never know everything.
Do enough research to identify a few important factors and make a decision.
Are you likely to end up making the wrong decision? Yes. However, inaction can often be more costly than taking no action at all.
Be flexible enough to learn from your mistakes and course-correct where necessary.
PRICING YOUR PRODUCTS WRONG
One of the important choices you will need to make for your business is the pricing of your products. Every area of your business will be affected by the price point you select, including cash flow, profit margins, salaries, and which costs you can afford to cover or not.
Pricing a product too high can drive away potential customers. Pricing the product too low means not maximising business profits. Unfortunately, there's no one-size-fits-all approach to setting the perfect price.
To set the right price for your products and services, you have to track what your competitors are charging. In addition, make sure to cover your costs and have healthy profit margins at the top.