Common entrepreneur mistakes and how to avoid them
When Scott Seamans first presented the idea of crocs to his friends George Boedecker and Lyndon Hanson, he was dismissed in seconds.
They said they were ‘the ugliest pair of shoes’ they had ever come across.
Even so, they admitted that they were ‘the most comfortable shoes they’d ever worn.’
And together, the three developed a very successful business!
In 2008, however, their success was tested. When The Great Recession hit, they just weren’t selling. They went from making 168 million dollars profit to losing 185 million dollars in a year.
But the crocs refused to die! The three guys went back to the drawing board. They improved their distribution network. They changed strategies, and they reduced overheads. Their main objective? To make crocs stylish again.
What was their masterplan? They simply targeted the people they believed mattered most – Gen Z. The people who grew up with crocs as kids.
They understood clearly that the youth influence what’s relevant. And simply because of that, they rose again.
Fast forward to today, there are a million variations of the ugliest but most comfortable shoes ever.
They have reclaimed a spot in the footwear world. And the shoes have become a multigenerational footwear staple for many.
The entrepreneur world can test you. Even the most successful business owners have made entrepreneur mistakes.
The statistics can back me up.
20% of new businesses fail during the first two years of being open. 45% fail during the first five years, and 65% fail during the first 10 years.
Only 25% of new businesses make it to 15 years or more.
How can you make sure that you’re not part of this? Here are 6 common mistakes that first-time entrepreneurs make and how to avoid them.
6 Common Mistakes business owners make
1. Not knowing your target audience
How can you market your product without knowing who you’re targeting?
The way that a product is produced and advertised depends a lot on who is expected to buy.
How old are they? What gender? What do they like to do for fun? How much money do they make?
These are questions that entrepreneurs must ask themselves.
Don’t try to capture everyone. That’s one of the common entrepreneur mistakes.
When you try to get a net to capture everything in the sea, animals cut through the net and break free. Ultimately, you end up catching nothing.
Fine-tune your message and let it speak to a specific group of people alone.
2. Not spending enough cash or spending too much
Financial literacy is a big issue in the entrepreneurial world.
If you’re new in the market, money is likely to be a concern for you.
Most entrepreneurs barely have any money to spend, and those that do can often get into the “you have to spend money to make money” mindset.
Both these two things are big mistakes.
There has to be a balance. Take into account your expenses and finances and learn to spend enough, but not too much.
Acquaint yourself with free online courses and learn how to manage your money.
3. Forgetting the competition
Wouldn’t it be nice if you were the only one in your line of business?
It certainly would be…but it’s impossible.
Everyone has a competitor, and if you think your business doesn’t have competition, you’re probably wrong. That’s one of the biggest entrepreneur mistakes.
At all times, you have to remember that you’re not alone.
Analyse the market and figure out who you’re up against, then plan and act accordingly.
4. Putting business expenses on personal credit cards
Business money is business money, and personal money is personal money.
That’s the golden rule.
Experts say that when you invest, only invest what you can afford to lose.
When you don’t separate the two accounts, you essentially make it easy to lose everything.
Mixing your personal and business accounts is the best way to get yourself into a pile of debt. You may end up filing bankruptcy and losing everything.
Be strict with yourself and only use money from the right accounts. It gives you an accurate picture of your financial status.
And it makes you more disciplined with your spending – both for yourself and for your business.
5. Taking ego to the workplace
It’s easy to get sucked in by our grand ideas. This is one of the common entrepreneur mistakes.
In business, you may always think that you’re the best, and that your ideas are the best.
This is definitely not good for your business or for your employees.
Don’t be deluded by how amazing your idea may seem.
Truth be told, no business is that amazing. No idea will “change the world.” Only hard work and strong execution will.
Remember, you’re not the most important aspect of the company. The vision of where the company is going, along with company culture is much more important than any of the founding partners.
6. Not understanding the market
After the Great Recession, the Crocs founders knew they needed to go back to the drawing board.
Having been in business for a couple of years, they understood their market. And they went after that target market.
You have to not only understand the market but also test it.
Without testing the market to see if your product is even a viable option to your potential can lead to months, if not years of wasted time and money.
Being new in the business world is no mean feat.
You will be tried. And you will be tested. But in the grand scheme of things, you will be fulfilled.
And if Farrah Gray’s quote is anything to go by, “Build your own dreams, or someone else will hire you to build theirs.”
In summary, the 6 common entrepreneur mistakes:
- Not knowing your target audience
- Not spending enough cash or spending too much
- Forgetting the competition
- Putting business expenses on personal credit cards
- Taking ego to the workplace
- Not understanding the market
We’re always up for a chat, so get in touch. Outside ideas are on a mission to help people and businesses grow.