Entrepreneur Mistakes that Can Hinder Business Growth
Building a business from scratch is never easy, so it's regrettable when entrepreneur mistakes compound the challenge. The good news is that new business owners can learn from mistakes that others have made in the past. By absorbing these lessons, they could save time and resources avoiding these same critical errors, and moving with greater focus and intensity toward growing their business.
Here are some common startup mistakes, and potential solutions:
Managing your startup's funds
In the midst of getting their idea off the ground, entrepreneurs could run the risk of mismanaging their cash flow. A few areas you may want to watch out for include:
Spending time instead of money: Money is essential to any successful business concern. But time is the one resource you have that is irretrievable.
Potential solution: By outsourcing specialized activities — especially those you aren't an expert in (e.g., payroll or HR issues) — you can help ensure you are investing time in your business in the most effective ways.
Not spending strategically: There's certainly a time and a place to invest in the business. Items such as office space and advertising dollars can be essential to growth, but these don't always give the best return on investment to a small or startup business. For instance, television and radio advertising is great for brand awareness, but doesn't necessarily contribute to effective lead generation.
Potential solution: To drive sales, consider focusing your dollars on different tactics, such as coupon campaigns, shopping cart recovery emails, or Google AdWords. The key is to spend strategically where you'll get the most bang for your buck.
Failing to estimate the time and costs involved: Some entrepreneurs become overly optimistic about how well they'll manage both their time and their money. Any veteran business owner can tell you things don't always work out that way. A startup always takes more time than expected, and unexpected costs always crop up.
Potential solution: Consider approaching your planning by factoring in more time and money than appears necessary today.
Planning and cash flow
It's a simple, but often overlooked fact of life for businesses once they’ve been established: You must keep a balance between cash that comes into your business and what it takes to pay for operating and related expenses. A long stretch of negative cash flow can cause business to slow to a crawl, which may become almost impossible to overcome.
To avoid this situation, keep the following in mind:
Start with a robust business plan: Most entrepreneurs will tell you, it's virtually impossible for a startup to succeed without a robust business plan. This document outlines how you get from Point A (building the foundation of your new business) to Point B (putting a thriving enterprise in place). While writing a business plan may seem tedious, make the effort to create a plan that points you where you want to go.
Be realistic in your financial forecasts: As part of your business plan, strive for realistic projections about where your startup will be in six months, a year, and further down the road. Inaccurate forecasts can lead to poor decision-making, while realistic projections can help you monitor cash flow and stay away from potential debt.
Keep debt to a minimum: There are numerous ways to obtain funding for your startup, from small business loans to niche credit cards. Don't lose sight of the fact that every debt you incur must be repaid. Focus your spending efforts on keeping debts to a minimum, so cash flow isn't squandered on debt repayment, as opposed to growth activities like new customer acquisition and key marketing initiatives.
Organization, time management, and leadership
Being unorganized: If you come to work every day without a clear plan, hours can fly by without a lot to show for it.
Potential solution: At the end of each day, assess the items that must be accomplished tomorrow. Assemble a list of priorities with the understanding that other urgent issues may come up later.
Multitasking: We're all guilty of switching our attention from one task to another within minutes (or even seconds), but studies show that pausing to check social media accounts, for example, requires more time to refocus on the task at hand.
Potential solution: Turn off social media and train yourself to set aside blocks of time to attend to individual projects without distraction.
Micromanaging employees: Business owners who fail to hire wisely often end up sacrificing valuable time overseeing their workers' every move.
Potential solution: To counter this trend, it may be preferable to let go of employees who need hand-holding and take a new approach to hiring the best job candidates out there.
Recruit candidates with the experience and skills to work productively on their own, or get employees the training needed to work autonomously. Micromanaging can also be a symptom of managerial inexperience; if an employee is productive and you're still micromanaging, your approach can stifle both the business's and the employee's growth. In this case, management training could be useful.
Calling unnecessary meetings: Calling numerous meetings or conducting impromptu conversations that block completion of essential tasks can hinder productivity across the business.
Potential solution: It's hard to say no to hallway chats, but unless some tangible benefit comes of it, recognize that sometimes informal chats and needless meetings are a waste of time.
Putting out fires: This time-waster is related to micromanaging, in that you're forever at the mercy of employees coming to you with urgent requests to "fix" a problem.
Potential solution: Delegate daily "emergencies" to the right people and reserve your time to focus on strategic activities. Also, plan ahead. Many so-called emergencies can be anticipated and addressed ahead of time, instead of in an unexpected rush.
Checking social media: Maintaining an active social media presence is critically important to your brand, but that doesn't mean you have to be the one responsible for making it happen.
Potential solution: Assign a qualified employee to monitor and feed your social media accounts daily, and establish a simple reporting system so you can both monitor progress and results.
Overworking: Long hours can lead to sluggish, unfocused performance — and your health and personal life can suffer as a result.
Potential solution: Try not to bring work home with you, but when it's unavoidable, set aside a few hours away from the phone and laptop to recharge your batteries for tomorrow.
Starting a business and keeping it up and running require making numerous decisions, and mistakes can happen along the way. Consider taking advantage of leading startup services available to help you feel more confident as your business gets underway.