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21 Most Common Mistakes New Business Owners Make

21 Most Common Mistakes New Business Owners Make

Jun 6, 2016

The decision to start your own business is a very big deal and more and more people are taking the leap of faith to secure their own financial security. We start our own businesses to escape the treadmill of employment and to give us more flexibility with family and lifestyle. A lot of people have really great ideas or skills and believe they can make a business out of it and that may be true.

Want to live in Paradise?

Want to live in Paradise?

Before you go venturing off into the unknowns of starting your own business, consider what it actually takes to make it successful. According to the Australian Bureau of Statistics, 44 percent of new businesses shut their doors within 3 years.

How can you be assured your new business isn’t going to be one of them?

There are fundamental practices and processes you must consider before you start and many pitfalls to avoid. Below is a list of 21 of the biggest mistakes start-up businesses make.

21 Most Common Mistakes New Business Make:

1.       No Business Plan or Strategy

Without a plan you are heading into the woods of the unknown and it’s very easy to get lost or side-tracked. Perfect planning and consideration to all aspects of the organizations needs and direction prior to starting, will determine if you even have a viable business to start with. A plan assists you to look into the future with clarity, strategy and long term goals.

2.       Lack of Competitor Research

Failure to consider what your competitors are doing or that you even have competitors is a major flaw for start-ups. It’s most likely someone is already doing what you want to do. So what makes you different? You won’t know this until you research who your direct competitors are and what your ‘point of difference’ is. It’s essential to play to your strengths and be a little different. We call it the competitive edge. What is yours?

3.       Failure to Budget and Lack of Sufficient Capital

When starting up a new business it is critical you have enough capital to run the business for at least 6 months. Most new business owners get so caught up in the doing the fun setup stuff, they fail to look at how much it is going to cost them. There are many unknown start-up costs to consider and fully researching all aspects of the business is needed to secure your success. Remember to budget for paying yourself a salary, marketing and advertising, products and services development, website costs, equipment, staff salaries… the list goes on.

4.       No Defined Goals

Starting a business without goals is like firing an arrow without a target, you’ve no idea where it’ll end up. It’s essential you know what you want to achieve financially, for yourself and for the business so you know how to drive it forward and in what direction. Goals should include your personal rewards, income, business profits, growth expectations and be realistic projections of what is possible.

5.       No Marketing Plan

It’s simple, a business does not grow, and business goals are not achieved unless there is a plan for marketing and advertising. A marketing plan assists by mapping out the steps needed to be taken to let clients and customers know you are here and ready to do business. Advertising and letting people know your business exist is essential, regardless of how great the product or service is, you need to let people know how and where to find you.

6.       Compromise on Price

A big mistake new businesses make is compromising on the cost of their product or service because they feel they need to, to get people to buy from them. The mistake is that they have also compromised on the perceived value of their product. People do not mind paying for quality and value and if you’ve done a comprehensive budget, you know you cannot afford to cut costs.

7.       Not Anticipating Market Changes

It’s easy to get comfortable and secure with regular clients and sales but in a single day everything and anything can change and you could be left without a business that pays you. Staying abreast of changes in industry trends and customer needs is critical. A good book to read in relation to staying on top of change is Who Moved My Cheese. If you snooze, you lose as they say.

8.       Partnering with the Wrong People

Partnering with the wrong people is a very easy mistake to make. Getting along with someone or being ‘friends’ is not enough for a business to be successful and could very well end your friendship and your business if not carefully considered. A firm partnership agreement with an exit strategy that also identifies your strengths and weaknesses (job descriptions) is necessary.

9.       Overspending

In the first few months it’s easy to get excited about making sales and the new found freedom your business is providing. It’s also easy to overspend during the initial start-up months. There are always going to be things to spend your money on; new equipment, additional products, marketing collateral, additional advertising, flyers, banners… Stick to your budget or risk your business success.

10.   Under-pricing

The easiest mistake for new businesses to make is to under-price their product right from the start. You want to get it out there, make sales and get the business up and running, however pricing is an enormous part of the process to getting it right, right from the start. Considerations include; your income, cost of goods, daily running costs, insurance costs and profit you want to make. Get it right from the start and you can ensure your success.

11.   Know Your Own Limitations

The biggest personal failure in business is, not knowing your strengths and weaknesses. You may be a great hairdresser but lack business acumen. You may be great at business but know very little about manufacturing and production. You could be a gifted technician but lack the people skills to network, sell and grow your business. When you understand your strengths you can work on your weaknesses.

12.   Not Being Transparent

Everyone makes mistakes in life and in business and failing to be transparent about our ‘mistakes’ can result in a lack of trust if these things are revealed later. A discreet but well-articulated full disclosure of where we have gone wrong should always be available. Better to hear of your failures from you, rather than your competitors, a newspaper or disgruntled customers.

13.   Trying Too Hard to Get Rich Quick

Most people don’t realise that it can take 10 years to develop a strong and established business, something worth anything that’s worth keeping. If you are lucky and have the right business model it can take no time at all. Keeping your eyes on the money you are making instead of the business growth potential, how you can diversify, changes in your industry, changes to customer needs can break your business. Slow and steady wins the race.

14.   Failure to Lead and Be Mentored

Running your own business requires leadership skills and most owners fail to upskill and continue with professional development. Without solid leadership skills many costly mistakes can too easily and often are made. Failure to have a mentor to guide your business growth can also be a common mistake new business owners make. We all need a coach or mentor to help us grow. Who is coaching you?

15.   No Life Balance

When you own your own business it’s common to ‘become’ your business. New business owners work all day and night, compromise their personal life because of the vested interested they have in it and forget to take time out for them self. Burnout and overwhelm are common. A lack of scheduling work hours and personal life can lead to resentment. You must know when to take a break.

16.   No Purpose or Cause

A lot of people who start businesses don’t really understand why they started the business in the first place, besides job flexibility and lifestyle. There are other reasons why you need to stay in business, bigger reasons why you need to succeed. Failing to understand your ultimate purpose and or contribute to a cause can lead to a lack of passion and therefore a lack of energy to keep it going. What is your cause or purpose, how are you giving back or making it all worthwhile?

17.   Trying To Do It All

When you start out you are the designer, the technician, book keeper, marketing manager, coach and production assistant. It’s impossible to wear all job descriptions and most new business owners are so busy making their business look good they forget to do the 20 percent of work that is going to make 80 percent of the difference. Look at where you can delegate, pay a virtual assistant and budget for an admin assistant or book keeper so you can do what needs to be done.

18.   Ineffective Communication Skills

When you go into business for yourself, you must be able to communicate easily with other people. Your business success relies upon you and how you connect with others. You must be able to sell yourself, your product and your companies services easily and effortlessly and this requires an upskill in average communication. Most business owners have not taken on education in the area of communication, rapport, sales etc.

19.   Failure to Protect Intellectual Property

When new businesses start they create many different documents, books, products and services. In some cases your business may be based upon an original idea that you have not protected. Protecting your intellectual property is critical as if someone steals your ideas, no may no longer have your business. Do your research on the most effective ways to protect your IP.

20.   No Rewards or Celebration of Successes

So you go into business for yourself and kick some goals, reach your KPI’s but unlike the world of employment there is no rewards ceremony or commissions to gain. If you fail to reward yourself and acknowledge your achievements its very likely you will eventually run out of energy for your business and forget why you started in the first place. Even the smallest of achievements requires a celebration or small reward. A celebration doesn’t mean an expense either, there are lots of ways to acknowledge your efforts that are not going to cost you time and money.

21.   Wrong Business Structure

Think carefully about how you structure your business before you begin. Are you a sole trader? A company? Or a partnership? Do you need to register for GST and submit a Business Activity Statement every quarter? It’s critical to get advice about what kind of business you are before you start because failing to do so can have you bogged down in unnecessary paperwork and you may be paying your accountant and the tax man more than you pay yourself.

12 years of Business Coaching in start-up businesses and having run 5 businesses of my own, have lead me to develop this comprehensive list. The major thing I have learnt over this time is how easy it is to make costly mistakes because of a lack of knowledge or research.

A lot of people who start businesses simply do not know how to run a business or they spend their time fluffing around the façade of the business making it look good and fail to hit the pavement and sell the product or service.

If you want to have financial freedom, lifestyle flexibility and take control without the hard work of starting from scratch, there is another way that leads to the same success or even exceeds it and that is a Network Marketing company or Multi-Level Marketing company.  They have proven systems that work and are some of the richest, debt free companies in the world. If they didn’t work, they wouldn’t exist.

The beautiful thing is, when you join a Network Marketing Company, none of the 21 mistakes listed above actually exist, they are risk free, all of the hard set-up work is done for you. All you have to do is start talking to people.

Before you start from scratch, consider a business you can start for less than $1000 and have all of the business back end support systems already in place with training and mentoring immediately at your fingertips.

After starting 5 businesses on my own, I truly believe MLMs are the way of the future as they have already created more millionaires than any other business.

Want to join one of the fastest growing, most successful companies in the world and work with a dynamic team of wealth creators who want you to succeed? Call me today to find out how you can join my team.

To Your Success,

Janelle Manton

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    2 comments

    1. Barry /

      You have to know the rules so that you can break them properly……
      I made all of those mistakes and yet I am still here….:-)
      I could send this out with my ad pac for new advertisers if you like… If you put a first free consultation offer it may bring you some business….

      • janelle /

        Hi Mr Bulletin, The beauty of those mistakes is that most people will learn from them and make it anyway… It just gets easier and less expensive. I’d love to discuss a Ad in the Bulletin 🙂

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