New entrepreneurs seem to get advice from everywhere. Starting a business brings experts out of the woodwork to offer advice, even though most of them have no real experience as an entrepreneur. Many newly minted small business owners get confused and try to listen to those they are closest to. This leads to poor decision making, and often causes businesses to reach their demise as quickly as they were created.
It is not always just bad advice that sinks the ship, however. From choosing the wrong business for your skill set, to not understanding your financials – there is a lot that can go wrong with a new business. In this article we are going to discuss 7 of the most important things that new entrepreneurs should not do if they want their business to reach years 2 and 3.
Things new entrepreneurs should not do include:
- Choosing a Business That is a Bad Fit
- Starting Without Enough Money
- Spending Too Much Time Listening to the Noise
- Not Listening to Your Employees
- Trying to Do Everything Yourself
- Setting Expectations Too High
- Not Knowing Your Numbers
#1 Choosing a Business That is a Bad Fit
It is safe to say that most new entrepreneurs choose their business based on either what they deem themselves to be best at or they just latch onto whatever opportunity happens to fall in their path at the time they are looking for something “more” in their life. Usually the latter opportunities seem too good to fail because of your own life situation (you want them to just work and will do anything to get out of your job).
Neither of these things necessarily means that if you fall into that category you are going to fail. However, just because you are good at something, or you see an opportunity, it does not mean that you are the right fit for that business. The business you ultimately choose to own and operate is going to take literally thousands and thousands of hours of your time. Time is one commodity that you can’t get more of. Your time as an entrepreneur should be spent on something you actually enjoy doing.
There will be plenty of crap stuff to do when you own any business. If you don’t absolutely love being a part of, and owning, your business then it won’t last long. This doesn’t mean you have to be excited to do every little task, but you should be excited about the work your business is performing. If you aren’t then it is a bad fit for you. You likely won’t have your heart in it, and will end up selling, quitting, or failing.
#2 Starting Without Enough Money
Every business requires a different amount of cash flow in order to survive on a monthly basis. Many businesses also have large cash needs to buy equipment or rent physical space before they can ever make a single sale. This is why it is important to proforma out your exact cash needs to set up the business and to survive for the first year. Doing this will help you understand how much money you have to put into the business based on what your expected sales are going to be. Starting without enough cash will certainly doom your business unless you are able to greatly increase your expected sales.
Our advice would be to make sure you borrow or raise more capital than you think you are going to need for the first year before you start buying equipment or open your doors for business. With cash flow you should always stray to the conservative side, because cash is the true lifeblood of every business.
#3 Spending Too Much Time Listening to the Noise
There is a lot of information out there on being an entrepreneur and building a business. Lots of “experts” make money from sharing repackaged ideas and philosophies and trying to get you inspired in your own business. On top of that you probably have a lot of friends and family that will tell you how you should run your business, or they may be negative and tell you you’re crazy. You can’t spend too much time listening, reading, or watching all of this noise. It stops you from doing what will make you a success – working. Be a life long learner, but set aside a time every day or every week to accomplish this. Forget all the noise, take action, and get to work.
#4 Not Listening to Your Employees
If you are a one man show then you should take some time to clear your mind from time to time and listen to the person inside that started this business. It is easy to get distracted and forget that person, but if you have no employees to help guide you down the path then this is necessary to make sure your goals remain clear.
When you do have employees that have chosen to partner with you along this journey you have undertaken to be an entrepreneur, then listen to them. Take their feelings and opinions on your business seriously. They won’t have all of the answers because they are not the person that started this business, but they will give you unique insight to your business that you can learn from. Failing to listen to employees that are dealing with your internal processes or your customers on a daily basis is a recipe for failure.
#5 Trying to Do Everything Yourself
Many small businesses suffer from hero syndrome. Entrepreneurs too often think that no one can perform a task the way they can. Well that may be true, but you don’t have the time to do it all. You can’t be in the details of every aspect of your business, or it will eventually all catch up to you. It will start to crumble around you, and you won’t be able to keep up.
You need to eventually bring on others to help you with tasks, and you need to trust them once you do. Don’t micromanage them, just hire intelligent people that can get things done the way you expect them to. Trust that they will make strong decisions, and coach them to improve if you do not like their performance. The bottom line is that once you bring a team on you need to trust their abilities so that you can focus on the things only you can worry about.
#6 Setting Expectations Too High
Goals are great to have. They are important in order to keep your business moving in the right direction. But the goals you set should be attainable. If you set goals that are unreachable then you are just setting yourself up for failure. It could hurt your lending relationships if you don’t meet their expectations, and it could deflate your employees and put a drag on business operations if you can’t hit the goals you set for your team. Make sure that you create expectations that you can reach in a reasonable time frame. Once you hit it then you can continue to up the bar.
#7 Not Knowing Your Numbers
If you don’t know where your cash flow is, or what your break-even needs are then it becomes very difficult to properly manage your business. On the other hand, knowing your numbers can help you make quick decisions that are important to your business’s growth. It can also impress potential lenders and investors that may be putting money into your business in the future.
The Smart Hack
Entrepreneurs have it tough enough when you are starting a business. Making new business mistakes can end your dreams before they really get started. It is important to set yourself up for as much success as possible. Following this list of 7 things not to do will start you down the path of getting your business off the ground and putting your best foot forward.