When you’re a young entrepreneur who’s just starting out on their early business adventures, there’s going to be a learning curve to the process whether you like it or not. We all need to learn what we still don’t know perfectly, and learning always carries mistakes with it. Heck, even people who’ve been running businesses and major corporations for decades still screw up from time to time, so you’ve got no reason to think you’ll be lucky enough or smart enough to avoid the same.
However, knowing that there will be learning through hard experience and screw-ups doesn’t mean that any preventative measures are doomed to failure. While you will never be able to foresee every possible problem that might hit your company, you can at least do your research and work to diminish the likelihood of certain glaring, more obvious and more easily avoidable general disasters that a lot of entrepreneurs get hit by.
That’s exactly what we’re here to discuss right now. No one can predict every future error you’ll make before it happens, we can at least cover some of the major mistakes your startup and you as an entrepreneur should avoid. With these in mind, you’ll have that much less on your plate as you grow your company into something big enough to be seriously proud of.
Your expectations are totally out of line with reality
This is a major potential downer for many entrepreneurs, especially those with little previous experience in actually running their own business. It’s also one of the first mistakes anyone makes with their startup. Basically, it consists of creating an idea of how your business is going to succeed, how much money you’re going to make or how fast you’ll grow without actually running all the numbers on what kind of conditions would be needed to get those things.
It’s easy for an entrepreneur to say: “I’m going to sell this $500 dollar product, sell at least 2 per day, make a thousand dollars and have a business that gives me $700,000 in revenue per year!”
But let’s look at the numbers behind that expectation: the average HIGH sales conversion rate for most businesses floats at around 1 to 2 percent if we’re being very generous –and this statistical average applies across the board, for both expensive and cheap products. This means that in order to sell just two products, you’ll need at least 200 serious visitors to your website or business per day. This is 6000 visitors per month, and getting those 6000 serious visitors there is no easy task, especially if you consider all the numbers of people who visit and barely stick around long enough to see a sales pitch; or the cost of advertising and promotion, which will absolutely eat into any profits you make.
The bottom line for this most fundamental of mistakes is that it stems from failing to actually run the numbers and look at realistic indicators. In order to avoid it, do those things, create a plausible image of how you’ll create the results you want and what specific efforts it’s going to cost you. Don’t rely on the mental laziness of:
Build website
Offer product
????
Profit!!!
Multitasking because you’re doing all the work
It’s easy to get caught up in your own passion for your entrepreneurial efforts and forget that you’re human and simply not going to be great at everything to do. It’s also understandable if your budget is a bit shoestring and you really don’t think you can hire a bunch of people to take care of different aspects of sales, marketing or other more administrative tasks.
Both of the above are understandable conditions when absolutely necessary for your companies earliest days, but even if you’re living them by bare necessity, you need to keep one key word in mind at all times: scalability. Your company has to be built with future growth in mind, and this requires scalability. Concordantly, your business will never be scalable until you create a structure through which you can delegate tasks and systems down as soon as you’re able to.
Thus, while you may need to play tightly at first, don’t let this be a trap you fall into permanently. Instead invest any profits or even borrowed money in systemizing your business and hiring either employees, robots or outsourced labor to manage key functions so that you can focus on marketing and drumming up new customers – overall growth strategy in general.
Failing to legalize and formalize
Again we come back to the subject of systemization for scalable growth, but here we’re talking about its most formal and legalistic side; legalization and formalization. What we mean by this is creating a company that’s been formally registered as such through the jurisdiction in which you live. We’re also referring to setting up a proper financial structure for managing your revenues, profits and tax payments –all of which you’ll presumably want to be dealing with.
Thus, as soon as you’ve got your company off the ground, legally incorporate or at least register it as a proprietorship. If this is a more serious startup with some IP assets or funding capital behind it, then you should forego the overly simple sole proprietorship registration and just consider incorporating and issuing shares to yourself and all your partners as soon as possible. Doing this will prevent a lot of headaches when it (possibly) comes to conflicts of ownership or earnings distribution.
As for your financial structure, get an accountant and create a separate set of banking accounts for your company –don’t share your personal finances with money that’s coming from or going to your business operations.
Failing to Treat Business Seriously
Your business is still small, you don’t have many employees and you’ve never been entrust with this much customer service or administrative responsibility before. Because of these things, it’s really, really easy to simply not take the whole thing too seriously. It’s easy to sort of coast along, shirk on a few responsibilities here and there and just get by enough to keep yourself afloat, all the while dreaming big of your big future business.
This is a heavy duty mistake! It will spoil your growth prospects and reputation right from square one and reinforce a condition of just barely staying afloat. Instead, if you really are serious about turning your startup into a real company with a professional image that gets taken seriously by customers or potential customers, then you need to treat it as such right from day one.
However much you decide to grow and whatever you decide to do in your startup, do it seriously. Honor your obligations to clients, keep every level of client relations fully professional and do as much as possible to create an image of ordered structure. This doesn’t mean that you can’t have fun and create an easygoing image that you show to the buying world; it just means that there should be dedicated professionalism behind that image. Think of Google as your example: from day one of their existence, they’ve always shown a certain level of playfulness towards both their employees and users, but behind that they never failed to maintain a razor-sharp motivation for serious growth and strategy. The playful image continues in things like their work campus and some other services, but behind both, there is now a multibillion dollar global corporation.
Failing to protect your data
Your information, be it client data, financial information or intellectual property, will include some of the most important assets your company owns. This will apply especially in your early days when you’re struggling to establish yourself, but it will not stop applying even much later if you grow much bigger. Information is the lifeblood of most modern startups, and having it harmed can lead to total disaster, it’s not something you can let happen.
In order to avoid any problems with data thieves, hackers or simple machine failures, protect your data rigorously. This means backing up all business related files regularly, protecting and restricting access to your machines, and encrypting your most sensitive information inside your computers or servers.
Make data protection an ongoing policy of your company.
Carl Petoskey has written for the tech industry for over 15 years, bringing poignant articles and topic to the forefront and expanding on important issues.
Image Credit: Shutterstock.com
