Common Mistakes Made by Entrepreneurs
Entrepreneur failure stories are just as common as business success stories. It seems that many entrepreneurs prefer to fail their way to the top instead of doing research and learning from the successes and mistakes of others before them. But these mistakes can be avoided, and Forbes
is here to share the 10 practices you’ll want to stay clear of, especially if you’re an aspiring entrepreneur:
1. Spending money you don’t yet have in the bank
The rush of a start-up may tempt you to start spending the money you expect from a major new customer or a rich relative. Bear in mind that things can go wrong, and you’ll be left taking all the blame. Not only is it embarrassing, it’s also one of the quickest ways to end your entrepreneurial career.
2. Opening your mouth while in a negative emotional state
A lot of strategic alliances and investor and customer relationships have been destroyed by entrepreneurs and their harsh words after a bad day at home or at the office. If you don’t have anything nice to say, it’s best to keep quiet and wait another day.
3. Over-promising and under-delivering
Learn to manage expectations, and always under-promise and over-deliver. Bleeding edge start-ups normally encounter product quality problems, missing business processes, and customer support issues. The rule "plan early, quote late, and ship early" will help you be a hero rather than a zero.
4. Creating a market you can’t supply or support
For products that are new and disruptive, make sure you have enough supply to meet the demand at roll-out, and secure a patent to prevent others from jumping in quickly. Often, entrepreneurs have their new positions in the marketplace taken away by deep-pocketed competitors and others able to meet the demand.
5. Counting on anyone who offers to work for free
Make expecting to get exactly what you paid for a rule of thumb. People who work for free will look to get paid soon in some way, or they may take it out in trade, which can harm your business. Student interns, however, are an exception, since their main objective should be learning rather than money.
6. Underestimating the importance of due diligence
Never skip the reference and credit checks, no matter how good a supplier or investor story sounds. Always visit in person to check remote office and production facilities before any money is paid up front on a contract.
7. Growing too quickly for your finances and staffing
Growing quickly can be a disaster when you don’t have a plan on how to implement that growth. If you know that you’re not prepared to handle a big order, learn how to reject it. Know that it takes a huge investment to build large orders, and that large customers are the slowest to pay. This is called "death by success" in the trade.
8. Confusing working hard for working smart
Quality is a thousand times better than quantity. Never reward yourself or your team on the quantity of time spent instead of results achieved. Prioritize your tasks, make use of technology, and constantly optimize your processes.
9. Being afraid to ask for help, advice, or even money
Don’t let pride and ego stand in the way of leveling with trusted friends and advisors, like most entrepreneurs do. Advice you don’t get can’t save your company. It is recommended for start-ups to have an advisory board of two or three outside experts who have connections to even more resources.
10. Relying on a verbal agreement in business
People only remember the agreements which benefit them, which is why it’s important to get every agreement on paper early and always. People come and go in every role, and there is no such thing as institutional memory, so put a copy in a safe place and have the agreements updated as people and environments change.