Most Common Mistakes Entrepreneurs Make
Entrepreneurs are not exempt from making mistakes. In fact, they probably make more decisions (and mistakes) than the average person. By understanding some of the most common mistakes entrepreneurs make, we can avoid them and navigate them better when they happen.
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.
A Lesson On Common Mistakes Entrepreneurs Make
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?
Get ahead of the game. Here are 6 common mistakes that first-time entrepreneurs make and how to avoid them.
5 Common Mistakes Business Owners Make
1. The First Common Mistake Entrepreneurs Make – Target Audience
The first common mistake that entrepreneurs make is not being clear about their 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.
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.
How do you know your target audience?
Assess Your Offerings
In order to know who you are targeting, you need to really understand your product.
Ask yourself: Which features and benefits are most likely to attract new business?
Know which features you are going to place front and centre in your marketing and paid advertising. And with this in mind, which current customers, images and copywriting should shape my messaging?
Answering these questions will help you to know better who your target audience is.
Client avatar work is really essential when it comes to knowing your target audience. It helps you to break down their traits in terms of age, gender, income level, and location.
Once you have this information in mind, it can guide your messaging and communication in all of your marketing efforts.
The thing you need to remember is this: The people who are most likely to buy your products or services share certain characteristics.
Read more on client avatar work here.
Define Who Your Target Audience Isn’t
So you don’t know who your target audience is. You’ve tried, but you can’t put a pin on it. The other way of getting around this is by defining who your target audience is not.
There will certainly be consumers who are close to your target demographic, but who will not act on messaging. Try to be specific in determining who your audience is and who it isn’t.
Use Existing Data
If you’re still struggling to know who your target audience is, use existing data. Research your competitors.
Who are they targeting and in what ways are they getting to their prospects?
Research the social media platforms that they are using. If it works for them, it’s also likely to work for you.
2. The Second Common Mistake Entrepreneurs Make – Money
Many entrepreneurs fall into the trap of either 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 new 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.
How do you become better at money management as a business owner?
Take a Course
It’s a hundred times easier to learn new things in today’s world than it was before the internet era. There are many courses that you can take up to learn about money and business.
To start with, you can find courses on Coursera, Youtube. Check out this course by Graham Cochrane on Youtube that talks about money management for small businesses.
Acquaint yourself with many of these online courses and learn how to manage your money.
Consult Finance Professionals
It’s rare that a small business owner has all the skills necessary to run a small business. Unless you’re an accountant or acquainted with the finance sector, it may be difficult to have all the knowledge at your fingertips.
Do not shy away from consulting finance gurus on how to increase profitability and scale up your business. It may be an investment, but it will make you much more money.
For more business money management tips, check out our blog here.
3. The Third Common Mistake Entrepreneurs Make – 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.
Why do you need to monitor your competition?
Learn from their Mistakes and Successes
If you can learn from other people’s mistakes, you’re less likely to encounter the same. And even if you do, you’ll be in a better place to handle it.
That’s the reality.
And if you can learn from their successes, you can find a way to use them to succeed as well.
What keywords do they use to be top of an internet search? Use Google Alerts to kee on top of this. What content do they have that attracts a lot of internet traffic? What campaigns have been a game changer for them?
Imagine you are two days away from launching a product, and then your competitor goes ahead and launches something very similar to it?
It may not land well with your customers. They’ll take you for a copycat. And because of that, this is information that you need to know well in advance.
Maybe ignoring the competition was fine advice a decade ago, but with technology driving change at a pace never seen before in human history, entrepreneurs can’t afford not to follow their competitors, at least to some extent.
4. The Fourth Common Mistake Entrepreneurs Make – Ego
It’s easy to get sucked in by our grand ideas. This is one of the most 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.
Ego can kill your business in two ways:
It Stops you from Learning
“When you stop learning, you start dying?”
Ever heard that phrase? It applies to all aspects of life, including business. Your ego will lie to you that you have all the knowledge that you need to be successful.
Accept opportunities to lean, even from those who are seemingly ‘below’ you.
With a big ego, you feel like you need to control everything.
You consider your views to always be the correct ones.
Obviously, you want things to be done well. Still, you need to realise that you aren’t perfect.
By being overbearing, critical and constantly watching your team, you’re creating a culture where your team believes that you don’t trust them.
5. The Fifth Common Mistake Entrepreneurs Make – The Market
The final mistake that most entrepreneurs make is 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 specific target market – Gen Z.
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.
Here is how you to understand your market:
Conduct Market Research
Every business needs to do some market research of sorts. It helps you to make good decisions both for you and your business.
Market research is gathering consumer feedback on your product or service and collecting pertinent information on the marketplace. This information includes what your competitors are doing and how they’re pricing themselves.
Some of the factors that you need to get clear about are:
- Demand for your product
- Market size
- Economic indicators
- Market saturation
This information comes in really handy when you’re making the big decisions and determining whether the business is worth it.
Test Your Market
Any time you are introducing something new in your business, you need to test the market.
Market testing involves taking a small-scale version of your business idea and getting customer feedback.
You can’t afford to be wrong in the large scale. This will cost you sums of money which can take years to recover, if at all.
Make sure to work in the small scale, figure out the blemishes that need to be corrected, and then you can ramp up production with confidence.
Our Summary – Five Mistakes Entrepreneurs Make
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 5 common entrepreneur mistakes:
- Target Audience
- 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.