Entrepreneurs, as first-time founders, are true believers who focus on creating a better future for themselves and others around them. They have passion, the will to win, confidence, and persistent commitment. They also possess the gritty determination to take risks and enter the battlefield of business with enthusiasm and the danger of failure.
Entrepreneurs with such characteristics are the ones who succeed later and change the world. They not only contribute to national wealth by increasing state revenue, but also provide a living for many people who become stakeholders in their business.
However, with all due respect, based on my long experience as a business executive, I can opine that most of these first-time founders make mistakes at the initial stages. With their determined mindsets, they rarely give up on their efforts. Nevertheless, by committing mistakes impulsively, they lose time and money.
They may be unaware of dangers lying ahead and oblivious to what to avoid on the way to success. Therefore, it is imperative that first-time entrepreneurs learn about possible mistakes that they may make before starting a business. Let us discuss some common mistakes first-time founders should avoid as they venture into unknown territory.
First and foremost, ignoring or downplaying market risks is the biggest reason new businesses fail. Entrepreneurship is not merely putting an idea into action based on a dream. Apart from the strong personal traits discussed earlier, it needs loads of preparation.
Making wrong assumptions can be deadly at the startup stage, where you can burn cash, resources, man-hours, and efforts. Hence, a better approach would be to take adequate time to study the potential customers and the real-time market needs.
Advice
Start-up advice is available in abundance. However, as Shakespeare wrote in Othello, “mere prattle without practice,” such advice can be cheap and inaccurate. There are three types of advisors that first-timers should avoid at all costs. The first is know-it-all types who believe that they know everything about any industry and that their advice will work in any type of situation. Although they sound smart and probably have a great deal of experience, their advice may not apply to every scenario.
The second type is those who are overly cautious and do not allow new entrepreneurs to take necessary risks. Although playing it safe is a good strategy, these cautious advisors can make everything complex through fanatical analysis. The third type to avoid are those who may have vested interests in the start-up business.
Often, first-timers believe they can consult people from the same business line. However, they may be from the competition and thinking of entering a similar business and have ulterior motives. All three types of advisors can harm the new business and, hence, should be either managed with caution or discarded.
Most new entrepreneurs, who naturally have daring and audacious qualities, feel that they should go full steam ahead and get to the market hastily. This is definitely dangerous for a new venture. There are plenty of notable examples of the failures of large and well-known companies because of their attempts to expand or start new business ventures too quickly.
One-step at a time
Speed and execution do not offer success. The speed of every action in the start-up must be justifiable. While procrastination must be dispensed with, too much haste must also be avoided. Therefore, first-time entrepreneurs must take one step at a time and make sure everything flows smoothly.
Recruitment for any size of start-up is critical in the long run. Wrong recruitment is a common mistake committed by many first-time founders. Due to a lack of experience, they may tend to hire unsuitable people at the start.
Most often, due to the requirement of industry experience for a new enterprise, first-timers may be unduly and overly impressed by people with related experience. During my career, I have come across people who are extremely impressive on paper and at interviews but are total failures in actual performance. Hence, it is exceedingly important to sort the pile according to the company’s requirements, not flashy resumes.
New entrepreneurs sometimes act only on enthusiasm and make mistakes that may last a long time. One such mistake is not focusing on sales situations and return on investment (ROI). These are two factors that sustain businesses in the market, particularly startups.
Sales revenue is of the utmost importance and keeps the doors open in any business. Recruiting salespeople is not only a tedious process but also a risky exercise. The performance of the sales team, regardless of the size, at the startup stage can either encourage the rest of the staff or ruin their enthusiasm if they underperform, as the business needs revenue to keep afloat.
New entrepreneurs often make the mistake of recruiting sales staff based on experience and qualifications when the attitude of the recruit is more important at the startup stages. In my view, the commitment and dedication of the sales team, collectively and individually, are more important than an impressive job application.
The newcomers must concentrate on cost-cutting and wastage control from the word go. The revenue must match the expenditure to sustain the operation. While an effective selling effort is essential, controlling the overall expenditure is equally important for a startup.
Salient factor
Hence, the cost of a startup must be at the lowest possible level. New starters ignore this salient factor because of their natural enthusiasm. I have come across young new entrants spending extravagantly on unwanted components such as large offices, excess staff, lavish decorations and plush furniture. At the start, the headcount must be minimal and other unproductive expenditures must be curtailed to the maximum. At this stage, the entrepreneur must be positive, without a doubt, but not at the expense of staying grounded in reality.
Lack of focus on customers is a deadly sin for newcomers. A startup founder needs to understand customers not only to validate the business idea but also to continue to do it continuously. First-time founders make the mistake of ignoring the importance of customer engagement time and again. This is one of the most important aspects of business success.
A specific customer engagement plan is a must for a startup. A new venture can miss out on many opportunities in the absence of a customer engagement effort. First-time founders must understand that there is a profound correlation between customer engagement and customer loyalty. This exercise is an important requirement to be done before the start of a new business. The expenditure incurred on customer engagement usually never goes to waste.
Leadership
First-time founders must pay attention to leadership failures. Any of the positive traits, experiences, knowledge, or education cannot replace the leadership that an entrepreneur is about to offer.
Leadership in a new entity works in two ways. The first is how the leader interacts with the staff, whether it is small or large. The second is the accountability taken by the entrepreneur to the staff on the decisions made on behalf of the business.
The staff of a new business operation must be made aware of these two vital factors from the outset to build mutual trust. Employees join a new business on the basis of the trust they place in the leaders. Hence, this trust must be kept alive to succeed.
Finally, first-time founders should consider entrepreneurship as a marathon, not a sprint. Doing away with the fear of failure is not a requirement but a necessity. While having absolute confidence in success, alternatives for possible failures also must be assessed. Hence, expecting failure in small businesses is normal, and entrepreneurs must expect it. Entrepreneurship should be considered as a long process. A new entrepreneur is likely to go through ups and downs and pitfalls regardless of all the preparations, analysis, or planning.
If the startup founder has an overwhelming desire to succeed and possesses ego drive, he or she will run a successful business later on.
