When I started my first business at the age of 21, I had all the right reasons for why I would be different and succeed. Well, guess what? I lost thousands of dollars because I really had no idea of what I was doing at that time.
In Australia, more than 60 percent of small businesses fail and cease operating within the first three years of starting. This fact is too often ignored by young entrepreneurs who are just as naive as I once was.
I now know that the main reason I failed was because of my lack of marketing skills at the time. I had a good product that people were actually buying, however, I wasn’t able to reach enough of the right people and turn them into buyers. Here’s your chance to learn from my mistakes.
6 common mistakes you want to avoid when first starting out
1. Giving up too quickly
It’s all exciting when starting out as an entrepreneur. Until you hit a brick wall. There will be many obstacles along the way and sadly most people simply give up as soon as the first challenge arises. It’s all too hard and staying in your job is just too comfortable.
2. Not having clear goals
A shiny new product in a pretty box is not a very good goal. After all, you didn’t go into business because you wanted to sell pretty boxes. You went into business to live your passion, make money, and to enjoy the freedoms of a successful entrepreneur. Be very specific and clear about what freedom means to you personally. Then work on those things that truly make an impact and help you achieve your goals faster. Read this post about the principle of leverage and how you can use it to grow your business twice as fast by doing half the work.
3. Not testing the market
It’s easy to assume that your product will sell and that everyone is going to love it. All your friends and family are probably telling you how great your idea is. What would they say though, if you asked them to pre-purchase your product and actually hand their cash over? Test it out. If out of 10 people no-one buys it, it’s probably a bad idea.
4. Ignoring the numbers
Chances are, the profit margins for your awesome product are just not high enough. Did you really think if you bought these cool t-shirts for $10 and resell them for $20 you made $10 profit? If you are serious about building a business, here are just a few things to consider: Taxes, accounting & bookkeeping fees, advertising cost, Marketing and promotional budget, rent, utility bills, shipping & returns, plus all the time required to build a profitable business.
5. Lack of focus
It takes focus to get a new business off the ground. Lots of focus. You need to have a plan of what your business is going to look like in a few months, as well as in a few years. Then, break your plan into smaller chunks and focus on staying on track. If you are like most young entrepreneurs you are probably working on the next project, even before you’ve seen any results. Stay focused. Also, instead of focusing on money, focus on adding value to your customers’ lives. If you can add enough value, the sales will come naturally.
6. Working on the wrong things
Yeah, no. Your logo and letterhead can wait. Start selling first. If it works you can start worrying about the cosmetics. You don’t need to spend hundreds or thousands on a fancy website either. Keep it simple and prove that your idea works on a small scale before you start going global.
Why do you think your business will be different? Have you experienced other challenges in your business or seen a new business fail? What’s the biggest lesson you have learned thus far? Leave me a comment below!