Updated: Oct 9, 2021
PUBLISHED WED, NOV 2 · 2011 1:54 PM EDT | UPDATED FRI, SEP 13 · 2013 4:33 PM EDT
Entrepreneurial ventures are fraught with missteps, mishaps, and mistakes. No matter how steeped you are in business-ownership experience, you are bound to run into problems at some point.
The key to your success is to quickly identify your mistakes, learn from them, and prevent the same mistakes from happening again, says Mike Michalowicz, small business expert and author of “The Toilet Paper Entrepreneur.Most business owners fall into the same traps. It’s those mistakes which could make the difference between owning a successful and viable small business, or owning a money pit that could leave you in financial pain for years to come.
So, what are the biggest mistakes owners make when starting and managing their small businesses? Click ahead for the most common missteps.
Author of “The Toilet Paper Entrepreneur”
Posted 2 November 2011
10. Trying to Get Rich Quick
Overnight success usually takes 15 to 20 years to achieve. If you go in expecting to be rich overnight, you may become discouraged early on and give up your dream prematurely. Know that success takes time, perseverance, and a little bit of luck. Give your business the time to grow. Only if your company is stagnant for a long time should you take it as an indication that you need to try something new.
9. Assuming You Have No Competition
Even if you have the latest, greatest, never-been-done-before approach to something, don’t assume that you have no competition. Competition is more than just the direct, obvious competitors. Competition is also all the available alternatives. What else could the consumer do instead of using your product or service? Could they do nothing? The customer almost always has the option of walking away. That alone is a serious competitive threat.
8. Being a Weak Leader
The success of your company is contingent on you being a strong, effective leader. This does not mean you need to be an authoritarian, but you also shouldn’t be everyone’s buddy. A great leader sets the course for the company, communicates it constantly, and inspires the team to get to the next level.
7. Being All Business, All the Time
Many entrepreneurs put their personal lives on hold to focus exclusively on their businesses. Ultimately, both suffer. There is no question your business needs your full attention and effort, but only in short spurts. Just like an elite athlete in training, you need to have a proper, healthy diet, get enough rest, and take breaks. Balance your personal and business life, and you will actually do better in both.
6. Setting Unrealistic Financial Goals
If all business plans came true, being a billionaire would be nothing extraordinary. Many entrepreneurs go into new ventures planning astronomical returns. Yet most never even get the business off the ground. Unrealistic goals not only hurt your credibility, but can also be an emotional drain. Set specific, measurable, accountable, realistic, and time specific (or SMART) goals to ensure continual progress. If you do this, your chances of being an overnight success (in 15 to 20 years) are much greater!
5. Having No ‘Rallying Point’
There is a reason why employees leave high-paying corporate jobs to go to start-ups, and it’s not for the money. People are driven to serve an important purpose, in addition to getting a paycheck. Many businesses never define their real purpose for existence, and continually attract a mix of employees who are seeking success in different ways. Clarify the purpose of your company, beyond just making money, and you set the stage for attracting like-minded employees. A team focused on the same goal is a very powerful force.
4. Cutting Prices
Often, the first thing entrepreneurs resort to when business is tough is to try differentiating on price. Cheaper prices mean more customers, right? Wrong! Most customers are willing to buy more expensive items because of the greater quality or the added convenience. During tough economic times, an increase in price, coupled with improvements in quality or convenience, can drive customers to your door. Price slashing is a dangerous game, which could lead to slashing employees or salaries to keep costs down.
3. Having No Clear Marketing Strategy
You never know where, when or how a new prospect is going to hear of your business. If you have a mix of messages out there, the prospects will have an unclear expectation of what you offer. Your company must present a consistent, clear message on all fronts. You will never get a second chance to make a first impression. Make sure every new prospect who sees your business for the first time receives the same, consistent message.
2. Not Being Forthright
The days of cover-ups died with Bill Clinton’s denial of sexual relations with “that woman.” The anonymous nature and grand size of the internet allows people to share anything with anyone at anytime. If your business tries to cover up a mistake, it is just a matter of time before word leaks and you are labeled a liar. That’s not good for business. Be the one to break your own bad news, and you will be perceived as honest and trustworthy.
1. Trying to Do It All
The greatest mistake entrepreneurs make is to believe they can do it all by themselves. While an entrepreneur can do most things, they do most things poorly. Just like any other person, an entrepreneur has one or two God-given talents. As an entrepreneur it is your job to identify what you are great at and do those few things to your fullest. Surround yourself with people who are strong where you are not. Great companies are built on the foundation of exploiting a few strengths, not on trying to.