Starting a business has many risks involved and putting everything on the line to bring your dream to life can be extremely scary. But that’s what separates you—an entrepreneur—from weekly check-earners. You have a mindset that achieves success.
After planning out everything, one of the things you need now is startup financing. That can be a bit tricky. Investors and lenders are less likely to invest a dime unless you can show something tangible. Many times, that means putting forth your own assets, personal finances, and possibly borrowing from friends and family.
Startup is a trying time, and the landscape is filled with potential landmines and pitfalls. It’s easy to make a wrong turn. Even one mistake could lead to financial devastation. You need to be aware of some of the most common missteps first-time entrepreneurs make, and avoid them at any cost.
Jumping Blind into the Game
This has to be the biggest mistake new business owners make—jumping into the game without knowing the rules. Having a strong business plan is not nearly enough. To be successful in the entrepreneurial world, you’ll need to do your homework.
Seeking advice from financial experts and experienced entrepreneurs can be a good start. Ask what worked for them and what did not. Also, you’re open for more opportunities if you network with would-be investors.
Unless you plan on bootstrapping, you’ve got to get your plan into action and gain interest from prospective partners. To get the ball rolling, a good place to find resources for entrepreneurs is the Small Business Administration website. Here, you’ll find a wealth of information on small business development and counseling, which can guide you all throughout your undertaking.
Knowledge is power even in business aspects. Many business owners tend to be too complacent with their ideas, because they “just know it will be a big hit.” But sadly, it eventually fails. Why? Because they didn’t take the time to learn everything it takes to succeed.
Many new ventures fail, usually, because of ignorance. Some call it the, “I can do anything without help” syndrome; others call it the “idiot factor.” Avoiding this can save you from terrible hassle.
Setting Unrealistic Financial Achievements
Another unfortunate mistake many fresh entrepreneurs make is thinking that their new venture will make them rich and powerful overnight. The fact is, most startups with such high expectations and lack of patience give up way too quickly before they even get off the ground running.
Recent studies reveal that the average time it takes for the typical business to become fully established is anywhere from 10-15 years. Not quite fast enough for many, which is why most throw in the towel too early. The key to success is setting specific, measurable, achievable, results-focused, and time-bound (S.M.A.R.T.) goals, which will allow your business to grow over time.
Not Securing Intellectual Property
You’ve got your “next big thing” ready to launch with a strong branding strategy to boot. You even have a lot of advertising in print ads and commercials. You have poured every ounce of sweat you have into developing your business.
Then one day you receive a notice: another company beat you to the punch. You failed to secure your intellectual property, including trademarks, copyrights, and most of all—patents. Now you might not be able to sell the product you worked so hard to get off the ground unless you pay fees. Or that other scoundrel company might decide to disallow your ability to market your product at all.
Now what? You have no money to start over.
That sad, but true story actually happens so many times on a regular basis. Taking time to protect all your valuable information is crucial. You can’t afford to slack on it, lest you plan to lose everything.
Diversifying Too Soon
According to Garrett Grunderson, entrepreneurial phenom and author, “Build opportunity for your business by retaining the cash in your business as an opportunity war chest.”
Before subsidizing beyond your company, think about investing in yourself. Focus on self-growth and you will make better choices. When you do decide on investing, put your money into things that you know. Profitable staking makes a good investor.
Not Investing in Employees
Your team is your backbone. They represent, not only you, but everything associated with your company. A huge mistake business owners make is not investing in payroll. They want top-notch work, but are unwilling to equate wages. This is so wrong, it boggles the mind!
If you want the best, hire the best. Remember the cliché, “You get what you pay for.” Inexperience will cost you so much and settling with less-than-great people can delay your progress.
World-class talent can streamline your processes and eliminates the stress of errors. What’s more, you’ll be more inclined to trust them with bigger tasks to take some of the workload off your plate—entrepreneurs need more time to project business direction than do all the work themselves.