Career entrepreneurs are not for everyone. In addition to possessing certain skills, the entrepreneur must also be endowed with the ability to make critical judgments. And still be able to learn from the mistakes of others (the most difficult, because it’s very difficult for us to draw conclusions from other failures, because “it happens with anyone, but not with me”).
In this article, we decided to focus on the three most common mistakes of beginning entrepreneurs and advice on how to avoid them …
1. Trying to do what the others do
One of the most common mistakes that entrepreneurs make over and over again is to do what everyone does and do as everyone does. In other words, they pursue fashion and open a business on a popular topic. However, until the time passes from the adoption of the decision to its implementation, the chosen topic becomes worn out, and the competition in the market is too high. As a result, such a grief-entrepreneur is in a highly competitive environment, and since his business is too young, the newly-made businessman is trailing behind the more agile colleagues. The chances of failing are skyrocketing, as customers can be lured away only by reducing the price of goods and services and increasing the budget allocated for advertising.
You do not need to start your business in the direction in which everyone else works. Look for your place in still undeveloped markets, among the under-served categories of customers and unmet needs. That is, where the greatest potential and least competition.
2. Inability to provide what people need
Another factor that condemns a novice entrepreneur to failure is his inability to meet the needs of potential customers. For example, you are developing an application for phones, but the number of its potential users is so small that it does not bring any revenue and is ultimately unclaimed. Or an application that falls into the niche of potential demand, but it does not have so many functions that the client needs, and so it’s actually far from the reality that possible users leave for a more caring and down-to-earth competitor.
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The best way to succeed as an entrepreneur is to give people what they need. If it is difficult to come up with something from scratch, then you can use the “reverse engineering” method that is, based on the existing proposal, quickly identify the attendant problems of customers and add services and products to their package of offers to solve these problems. There is also an option to offer goods and services in conjunction with a lower price, rather than their independent price in the market. This will help sell more, and by increasing turnover increase the profit.
3. Spending more than earning
And, finally, the worst mistake an entrepreneur can make is connected with poor financial management. Unthinking spending at a stage when the idea is only in the bud, when nothing is clear, when enough research has not been conducted and when the first profit is only a dream and assumptions, but not a reality, inevitably lead to collapse. As well as investing in design, while the concept of business has not yet been developed, attract investors and hire expensive professionals without a clear plan to increase revenue.
The solution to this problem can be careful preparation at the first stages of business existence, which consists primarily of a detailed market research. The idea of the field of activity and the nuances of future activities will help to avoid unnecessary and unreasoned spending of personal funds, as well as to prevent subsequent loans from the bank and appealing to investors for help at a stage when the enterprise does not yet bring any income or revenues will be too small to pay off creditors. It is also worth paying attention to the attendant expenses: renting a room, purchasing equipment and office equipment, salaries for staff, etc. There is always something that can be practically painlessly abandoned in favor of a cheaper option. Careful preparation and audit at this stage actually gives business a chance for development and subsequent prosperity, sometimes even in conditions of non-compliance with the first two points of our article.