Mistakes you can avoid – before you even set up your business
When a business idea takes off in your mind and keeps it busy, you are in it: at the very beginning of the adventure of running your own business.
Exciting and creative, this is also the phase when you might take the first crucial decisions about which direction your business should go.
Here are some common mistakes that can be prevented – if during this phase, with no cost at all.
The mistakes you can avoid:
- Considering a subject you are not highly interested in
You will need to work hard and long, and this will be so much easier if you are working on something that is really interesting for you. No business idea will turn out successful if you do not have enough motivation to devote your time and effort to the subject. So if there are topics that make you naturally curious and excited – that make you forget about the time – those might be the best ones to choose from, when deciding your business subject.
- Picking an industry you know too little about
You can, of course, always hire other people to do things for you. But to run your business you will always need a good overview of the industry, your competition, the current situation, as well as the future trends. If you pick a field you already know well and have contacts in, your starting point will be much stronger than if you go into a brand new field and need to gain the knowledge and contacts from scratch.
- Planning diverse products or services that serve everybody
It might seem safer to offer a wider range of services or products to all sorts of customers, but the opposite is true. When people seek something, they do not trust “experts on everything”, they will usually choose someone who knows as much as possible about that particular thing. Even if you believe that your service or product might really serve everybody, resist the temptation to come up with a broad, general offer; specialize on something and someone. Otherwise you will neither create great services/products, nor be able to sell them.
What you need is to find and promote your niche, something that makes you special and different from your competition. Read more about it here.
- Creating services or products for unfamiliar target groups
For your potential customers, choose the types of people that you know really well. You will know where to find them, what they need and appreciate, and so on. If you are still tempted to make broader plans, try the strategy of starting with just two particular target groups, and keeping the option of broadening your business later. You will, anyway, need to start somewhere, and have some products or services to start with!
- Choosing the wrong place
This applies especially if you are considering opening a public place such as a shop: the best is to site it somewhere where your target group passes by naturally. Otherwise, if you open a boutique in an industrial suburb, or a bar for young people in an area that they hardly go to, you will need much more money (and luck) for marketing, to bring the people there.
- Creating the whole plan on your own
Your ideas might be objectively brilliant, but your success will depend on how others perceive them. So you should always cross-check your ideas against other people´s opinions. You can start by asking a few people who represent your target groups, and whom you really trust, to give you their feedback. Later, consider doing wider market research.
- Going into a business partnership with one other person
It is generally recommended that one should avoid having an even number of business partners (including you). Make it an odd number, for example three, so that you can vote when opinions differ and decisions must be taken. Also, divide the main responsibilities: make each partner responsible for something, (e.g. administration, sales, production), not everybody for everything.
- Going into a business partnership with good friends
Opinions differ here. Mine is: it’s better to avoid this altogether. But if you are thinking about this option, consider two things. First, whether you are compatible at work (business objectives, strengths and weaknesses, styles of planning, management, problem-solving, etc.), not only as friends. The second question is whether you are ready to accept the fact that your relationship will certainly change. It will become less friendship-like and more business-like, no matter how smoothly your operation goes.
- Starting a business without social support
You need to have some supporters around, to encourage you, follow your progress, and cheer you up in harder times. Find them in your family, among friends or other like-minded people. If, however, you feel that your whole private world is against the idea, you will have a hard time doing business. The solution does not have to be exchanging all the people around you, or ignoring their opinions: perhaps there is something in your communication you could change to improve the situation. Try coaching if you get stuck with this, and would like to change it.
- Underestimating the work, time and money that will be required
Two business experts, Stephen G. Fairley and Chris E. Stout, once wrote: ”It will take you three times as long, require twice as much energy, and cost four times as much as you think it will to get your business off the ground.“ How true! Something you can still do to make more realistic estimates: make a proper business plan (even if you are not seeking investors and it will just be for your own use); always keep something in reserve; and avoid investments and settings that would put your family at existential risks if they did not work out.
- Believing that in successful businesses things go well at all times
Even in the best case scenarios, things can go wrong, and not every idea turns out a success. Some things might not work out due to external circumstances. But also you will inevitably make some mistakes and wrong decisions. Do not give up easily. In each mistake, find an important message and the lesson it teaches you, learn from it, and move on. This is what you can do to get further than many other people who had great ideas but lacked persistence.
- Getting stuck in that dream phase
If you feel you have the drive for starting a business, do not waste precious energy by staying in the phase of dreaming for too long, without any action. Not sure yet about going into it? Think what information and help you still need to decide whether you really want to run your own business. Get the information, (research, ask people, contact professionals), decide, and start now. You do not have to give up your job yet, or register a company immediately, if you think it is too early. Quality research, planning and preparation might, however, take weeks or months, and sometimes years, if it includes gaining qualifications. So why postpone it, if you can work towards your dream in smaller or bigger steps already, – starting now?
Is anything missing from this list of mistakes? Go ahead: share your opinion with other readers or drop me an e-mail, and I will be happy to add more useful tips to the site! coach @ smallbigchange . com (delete spaces in the address)