If you have an entrepreneurial mindset, you may be eager to bring your business idea to fruition.
While an eager entrepreneurial spirit and business mindset are needed, starting a new business from the ground up is no easy task. And, while being your own boss and owning a company can be incredibly rewarding, there are many challenges new business owners face.
Preparing for these potential risks and challenges may help you and your company succeed while also avoiding costly business mistakes.
Below are some of the most common business mistakes startups and entrepreneurs make.
No Business Plan
It should go without saying that you need a plan before you can launch your business venture. You can fully trust Medium in this regard.
Despite a business plan being an essential document and guide, many small businesses and startups often begin their venture without adequate planning or research.
When you have conducted the necessary market research and competitor analysis, your business plan should provide:
- A detailed business description
- Market analysis
- Define the target audience and demographics
- Details the demand for your product or service
- Financial forecasting
- Competitor analysis and monitoring
- Define company vision, goals and methods to achieve them
- A time frame for when you expect to achieve your business goals
- Strategy for growth
The business plan may also outline projections regarding assets, liabilities, cash flow, income and other financial specifications.
Not Protecting Your Assets
A common business mistake many startups make is not registering their business or adequately protecting their intellectual property.
Common areas of intellectual property that relate to business include designs, patents, trade marks, trade secrets and copyright.
Principal Lawyer and Founder of Progressive Legal, Ian Aldridge, describes intellectual property as the single most important asset of an enterprise.
IP protection rights are designed to protect company assets and prevent them from being misused, stolen or misappropriated.
Mediocre Financial Preparation and Resources
In every business, there is one thing that is always the same.
This is regardless of the company size or structure, what the company does and even what the company provides or sells.
The one thing that is the same for every business is that money will come in and money will come out.
And, the way you handle, manage and record your company’s finances and financial interrelations may greatly impact its success.
A common business mistake a number of startups make is not properly assessing the amount of capital needed to get the company off the ground and operational.
As it is unlikely your company will make a million dollars overnight, it may take some time for you to break even and see a return on investment. It is important you have enough financing and budget accordingly to help you stay afloat during this period.
As a new business owner, you may find it beneficial to work with a business advisor or qualified accountant to help establish budgets, cash flow forecasts and prepare financial projections for your new business.
Forgetting To Learn From Your Mistakes
Another business mistake new business owners and startups often make is not learning from their mistakes the first time around.
It can be tempting to believe that you don’t have to make mistakes in order to succeed – or even that mistakes are never okay!
But this just isn’t true, especially when it comes to business. Every industry, every company, and every business person makes mistakes at some point or another.
The difference between success and failure comes down to how well you learn from your errors and whether you keep making the same ones over and over again.
According to the Australian Bureau of Statistics, 20 percent of new businesses will fail within the first 12 months of operation, while 60 percent of them will fail in the first three.