Starting up a new business is always a challenge, demonstrated by the fact that approximately 50% of new businesses will fail within the first five years. Knowing what the common mistakes are that result in business failure can help new entrepreneurs ensure that they avoid the same mistakes, allowing their organization to grow and thrive. Successful businessman and life-long entrepreneur, Victor Mitchell, lists some of the most common mistakes new business owners make:
Choosing the wrong business structure. Many new business owners will start as sole proprietorships, as there’s less administrative hassle. However, LLCs and corporations are much more robust and can protect personal assets from liability. Smart business owners will consult many resources before settling on the best fit for their enterprise.
Doing everything alone. Many new entrepreneurs fall into the trap of taking on all the roles of the company themselves, leading to burnout and a failed business. All businesses are based on teamwork and delegation of tasks, so ensuring that there’s a strong team in place from the beginning of the venture will set the business up for success.
Hiring the wrong people. There is usually a lot of emphasis on culture fit in new businesses, resulting in the hiring of people based on their personality instead of their skills. Businesses thrive on having skilled employees, not employees that are fun to be around.
Never take risks. All business ventures require some form of risk, and businesses that avoid all risks and play it safe all the time are those that are most likely to fail. Sometimes a calculated risk can turn the fortunes of a small business around.
Taking on too much. While expansion and growth are essential to the success of a business, so is building a solid foundation and infrastructure to support such growth. Successful business owners are those that understand they’re in for the long haul and plan accordingly.
Not enough marketing. Many new start-ups have a great idea but tend to assume that their idea is enough to carry the business. Successful organizations dedicate themselves to marketing and networking as early on as possible, to ensure steady and sustainable growth.
Stop learning. In these rapidly changing times, businesses need to keep learning and adapting to succeed. Learning from past mistakes ensures that those mistakes won’t be repeated.
Spend too much, or too little. Some new companies are so worried about spending money that they curb growth, while others spend all their investor money within the first couple of months. Smart entrepreneurs are those who plan their spending wisely, knowing when to take on an opportunity and when to pass.
Not being prepared for the lifestyle change. On a personal note, many entrepreneurs find themselves blindsided by how much time starting a new business consumes, and the mental toll it can take.
New entrepreneurs often get caught up in the excitement of a new venture but taking the time to plan and learn from previous mistakes can be …