Top 5 Mistakes New Businesses Make

This month is the sixth anniversary of me quitting my cushy 9 to 5 job. I told my boss I was sick of working FOR the man and instead I wanted to be the MAN.

Since then I have started four online businesses and helped dozens more get off the ground and up and running. I guess you could say I’m a serial entrepreneur.

During these last six years I’ve had the pleasure and displeasure of working with all types of entrepreneurs and I’ve noticed a few things. At this point I can tell which entrepreneurs are going to find success in their new ventures and which ones won’t within the first few minutes of talking to them.

I’m sure you’ve heard the statistic that half of all new businesses fail within the first five years. From what I’ve seen most of them fail because of easily avoidable mistakes. If you want to beat the statistics, you can. Just avoid these most common mistakes new business owners make.

Mistake #1: Not doing your homework.

Having an idea for a business is just that and no more. It’s not a business plan, a marketing plan or even a goal. How will you find customers? What is the first product/service you plan to sell? What price will you sell it for?

Successful entrepreneurs do their homework BEFORE they start a business. Research and planning can be tedious and boring when all you want to do is jump in and start making money. But you’ve got to do it.

After you’ve come up with an idea for a business begin researching the market and industry you’ll be entering. Find out who your biggest competitors are and who you would consider an ally or similarly sized company in your field. Also look at what products/services they are selling and pay attention to price points. You need to do a thorough evaluation to determine if your idea is feasible.

You also need to get some plans together before you jump into this new market. Most businesses fail because they had no plan in place when they jumped into the market. They just threw up a website, slapped together a product and waited for the money to roll in. That just isn’t going to work in 2013 when customers are looking for value and quality for their hard earned dollars. Your initial idea will only take you so far. You need to go beyond that and look into how you plan to run your business.  You’ll also need to come up with a marketing plan. Write out contingencies and back-up plans for all scenarios.

The saying “What you don’t know can’t hurt you” doesn’t apply to entrepreneurs. Not being prepared and jumping in without any research will kill your business.

Mistake #2: Not making the marketing of your business a priority.

Newbie entrepreneurs can sometimes get so excited about starting their business that they focus all their efforts on making a product and website. This is a mistake. In order to maintain a steady stream of clients and customers it’s crucial to market your business.

Smart entrepreneurs know that marketing their business goes beyond creating a website and line of products/services. You must get people to go to your website, click on your sales pages and come back for more. There are many ways to do this; some can be simple and inexpensive while others can be complicated and require a lot of money.

Any Google search will reveal the expensive and time consuming ways to market your business. So I won’t touch on those methods. An inexpensive way to get potential customers is to offer something for free. People like free stuff. Offer a free one hour consultation. The purpose is to get potential customers to contact you. In turn you can convert these leads into customers.

Another idea might be to offer up a free newsletter.  A newsletter is a way for you to continually speak with leads and customers. You can remind them you are still around and can solve any of their problems with your products and/or services.

Mistake #3: Lack of action and dedication.

A world of opportunity awaits for those entrepreneurs who are dedicated and ambitious. Self-motivation is critical to the long term success of any home-based business.

Working from home can seem like the ultimate in achievements for any entrepreneur. You get the benefits of no commute, working in your sweatpants, setting your own schedule, and more personal freedom. The flip side to this is that distractions are everywhere; an episode of your favorite TV show will always be on, your children will always want your undivided attention, there will always be household chores you need to get done, the phone will constantly pull you out of your focused state, etc.

An inability to stay motivated and focused is a major reason why many home based businesses fail. The trick is to balance your environment. That’s why having a dedicated work space is so important. Do not let people come in and out while you work, you will never be able to focus on the task at hand if your wife, husband or kids keep asking you questions. Set daily to do lists for yourself to make sure you stay on track and complete tasks. Continually challenge yourself to make your business better and more profitable. Whether you are launching new products, researching new markets or fine tuning your website, it’s all about taking action.

Mistake #4: Not managing cash flow.

This is one of the biggest problems new business owners have to deal with. In the beginning stages there is a tremendous amount of outflow of cash without any immediate return.  If you’re not careful you can run out of money before you’ve established your business.

To combat this problem you’ve got to be ready and plan for it. In the beginning when you’re buying products and services left and right to get your business up and running establish payment terms with these vendors. Nearly every vendor you work with will ask you to pay them within 30 days. Before you have them do any work for you ask to draw payment out to 60 or 90 days. This will give you more time to get everything you need done and have some money come in before you start paying those invoices.

Mistake #5: Being too general

Successful entrepreneurs know who their ideal customer is. They can tell you their age, how much money they earn, their hobbies and their likes.  It’s the businesses that try to be everything to everyone that fail.

Don’t try to target everybody. You’ll run out of money before you even get started. Instead start small. Market to a specialized market or niche. For example if you say you want to be a handyman you’ll run into this problem. That’s way to general a term. You’ll run out of money trying to tell everyone that you do home renovations, build furniture, repair roofs, install fixtures, paint and everything else. That’s too broad of a range to find customers. You’ll be sending out ads to everybody and their mother with that approach. And that’s a problem when you’re new and have a limited budget.  Instead specialize in one area like home renovations. Call yourself a home renovation specialist. This way you can find your target audience easier and your marketing budget will go farther.

Over the last few years I’ve seen so many businesses go up and unfortunately I’ve seen a few that fail. As it turns out, many new businesses make a lot of the same mistakes. Keep these common pitfalls in mind when laying the groundwork for a new venture and you’ll help ensure your one of the entrepreneurs that finds success.

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Good luck!

Ethan Warrick


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These content links are provided by Content.ad. Both Content.ad and the web site upon which the links are displayed may receive compensation when readers click on these links. Some of the content you are redirected to may be sponsored content. View our privacy policy here.

To learn how you can use Content.ad to drive visitors to your content or add this service to your site, please contact us at [email protected].

Family-Friendly Content

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