Don’t be surprised with the failure of a new born business enterprise in its very year of infancy. Don’t be frustrated by how many new entrepreneurs fail to achieve their dream. Approximately 25% of start-ups shut down within the first year. Call it the spirit of capitalism or Darwinian natural selection in the corporate jungle. But many start-up enterprises die in the early stages of infancy. The list of reasons for new entrepreneurs failing to make it into the second year, range from financial, technological and marketing based, through to lack of people skills.
But wait. Entrepreneurs fail, enterprises die, but entrepreneurship does not.
We take you through a list of what we believe are the top mistakes made by new entrepreneurs make and how to avoid them.
Remember, working a regular job for a guaranteed pay check, and working independently or co-dependently are two different things. What matters most are the business lessons you learn from the mistakes that others have already made. Or even the ones that you may have made.
The crux of the matter is that you have to keep your tail up while learning from the knocks you take. Take a look at these business mistakes that new entrepreneurs typically make.
New entrepreneurs do not empathise
New entrepreneurs are just human beings, not machines. There is nothing wrong with young entrepreneurs making mistakes. It’s part of being human.
What is wrong, is for entrepreneurs not to be human enough to understand the people they walk with. From their employees to their customers, new entrepreneurs can fail to step into the shoes of others.
Satya Nadella, CEO of Microsoft in his autobiography, Hit Refresh, talks of the absence of empathy and what it means for business leaders, corporate executives and entrepreneurs.
Instead, be empathetic. Learn to step into the shoes of someone else. Put yourself in their position and map the pain points they are going through.
How will it make you a better entrepreneur? It will help you to make better decisions. It will help you to assess the challenges that people face and make you more creative. And finally, create a solution that can add value to your efforts.
New entrepreneurs are not clear about their value proposition
There are several instances of start-up firms going bust in their first year because their product did not add value or was overpriced. Thus, they overestimated the value that they delivered. Or, they under-priced and underestimated their value.
Recall the words and actions of Mahatma Gandhi: You must create value and positively impact the lives of the people around you. All new entrepreneurs should bear this in mind. In other words, ask yourself if you are sure and crystal clear about the value you deliver through your product or service.
Use market research to get an insight into the value propositions created by contemporaries in your industry, the trends of pricing, cost factors and the response of customers.
Time management is a real pain
Too often, new entrepreneurs repeat the same time management mistakes. Very often they’ll consider what is urgent to be important and attempt it first — and often on their own — without accounting for time engagement or the value of the task. Secondly, they’ll consider what is not a priority to be unimportant.
The lesson is to understand that the truth is quite the opposite.
What is urgent is usually not important and thus can be delegated to someone else. Statistics show that you should track employee time at work and check the hours that you are actually productive.
On the other hand what is usually not a priority and can be kept for another day, is something that should be done in phases. This is the long-haul work and needs your attention, time and effort in small doses but on a daily basis. Move slowly but make sure that you keep moving.
New entrepreneurs are trying to hit the ground running
Talk of the greatest failures in start-up businesses and you’re sure to come across entrepreneurs that tried to hit the ground running and crashed.
How many times do we see new entrepreneurs driving at speed on the business highway with mist on the windscreen? Start-up firms that are built on shaky foundations with entrepreneurs having little or no knowledge of the business model, revenue model and cash flow, will find themselves in serious trouble.
Instead, take a long, hard look at the industry economics. Ask serious questions about pay-out time, gestation period, upfront capital investment, return on investment and compounded annual growth rate. Do research on revenue, pricing, costs and product development ideas.
Take your time, moonlight on the start-up model, incubate the ideas and seek expert opinion from people that have been there before you.
New Entrepreneurs ignore the value of marketing and communications
Communication does not follow an algorithm and even new entrepreneurs that understand the number crunching can fail by getting their marketing strategy wrong.
This includes a whole lot of mistakes in marketing and content strategy across media and platforms like the web, social media, press releases and video sharing platforms.
Think through the alignment of content strategy with your business in mind. Analyze the timing of content across digital channels. Remember that the way you create and publish content is more about your brand positioning than merely the content itself. Hire specialized freelancers for social media marketing, content writing and graphic designing instead of doing it yourself.
Remember that entrepreneurship in the modern day is not about selling products and services. Primarily it is about solution sales. If you can get your act right in terms of offering a solution to challenges, create value and build scale with a clear idea of the direction that you want to take, it should be an exciting ride.
Hang in there, learn the lessons and keep moving forward. This will make you a successful entrepreneur!