Many people dream of one day owning their own business and working for themselves. That’s basically the American Dream, right? Usually, the thought of never having to work for somebody else ever again is motivation enough, but for others, it’s the thought of pursuing a unique dream. It’s the idea of autonomy. It’s one of any number of reasons—and whatever it is, it’s driving more and more people every year to become entrepreneurs and start their own businesses.
Unfortunately, for all the enthusiasm that people have to work for themselves and chase their own dreams, they are still susceptible to the same mistakes made by beginner entrepreneurs, if not more-so. While there are many perks to owning your own business, there are also many things that need to be avoided to help ensure a successful business venture.
Here are three common mistakes made by budding business owners.
1. Growing Too Fast
This is probably the most common mistake new business owners make, and it’s also one of the most avoidable. It’s easy to get excited when you start to see revenue come in, and it’s even easier to forget that business-expenses mount quickly.
“The issue comes when your growth gets in the way of running your business correctly,” writes Brian Hamilton, with Sageworks Stats. “While I’m a big believer in the importance of growing sales, most entrepreneurs just figure that if you increase your top line, everything else will take care of itself. Unfortunately, more sales does not always equate to more profit.”
You aren’t going to be the biggest in your line of work right away, and you will never reach that destination if you try to expand too fast. A successful business is one that has time to grow and expands steadily and consistently. When something is working, tweak it until it’s perfect, and then slowly and steadily move on to expand your company.
2. Not Hiring the Right Employees
With small businesses, you see the problem of “the wrong employee” all too often. The family member that was hired without the right qualifications, or a friend of the same caliber. The problem is, a business is truly only as good as its employees.
“Many entrepreneurs have good instincts about whether someone is right or not for the job. But you shouldn’t rely just on gut feelings,” write the experts at BDC Canada. “The recruitment decision should be founded on solid, objective factors.”
Some people believe that hiring and recruitment tactics might need a little “extra” attention if you want to attract top candidates. Dave Rietsema with ATS actually recommends using personality tests for recruitment, including the Myers-Briggs, Gallup, and IPEP-NEO. There are pros and cons to this approach, so test it out yourself.
Only hire people you know you’ll need, and double down on only hiring those who are qualified to hold the position. Another thing to remember is that just because you’ve hired somebody competent doesn’t mean that they’ll always stay up to par. Knives get dull after awhile, and it’s up to your employees to keep themselves sharp. This is one of the primary reasons it’s important to hold regular performance reviews for staff, and could be the difference between initial success and subsequent failure.
3. Lack of Strategy and Technology
When creating your own business, it can be tempting to want to dive right in, but, without proper strategy, you’re likely going to drown in the drink. Most people who go in unprepared don’t understand that running a business is all about being one step ahead, and careful planning and execution will help you secure success at a greater rate. There are too many unforeseen obstacles in the business world for you not to be prepared with strategy.
According to Pepperdine University, when it comes to the standard strategies dictating a business’ operation, there are a few distinct camps into which almost all businesses fall:
- Some create a superior product, offering it at a premium price point
- Some aggressively target a specific niche market, relying on brand loyalty and high enthusiasm from a small segment of market share
- Some employ the cost leadership model
Figure out which of these you’re going to be doing, and then utilize the tools that you need to make it happen. Make sure the service you’re offering will be needed in a year, instead of diving into a fad that will die down quickly.
The very best businesses will use big data to implement strategy, even though it may seem intimidating at first. However, using all of the tools available means researching the latest and most realistically tenable in technological and research solutions. Big data solutions are now simultaneously affordable and effective enough that all small businesses should be using them.
In the near future, technologies like AI and the Blockchain will join big data as non-negotiable business tools. Utilizing technology correctly will be imperative for even the smallest mom-and-pop shops of the future.
Just remember that starting a business is a huge investment of both time and money, and it would be a shame if you wound up wasting either one. Don’t make the mistakes of trying to grow too fast, or of hiring the wrong team to help crew the ship. If you’re patient as well as strategically sharp, your business should be well on its way to becoming the success you know it can be.