Four successful small business owners offer invaluable insight and advice into how to avoid common yet deadly pitfalls when launching your own business.
Starting a new business can be exciting but it’s also risky. The Small Business Association recently found that only 25% of small businesses last longer than fifteen years. Sadly, there are many common yet deadly mistakes you can make that will suck the life out of your new company before you have the chance to get it off the ground.
The good news is that others have gone before you. Small business owners have overcome the pitfalls. And many are willing to share their advice on how to start a company that will be successful long-term. Read on to see how experts address four common questions regarding launching out to become an entrepreneur.
Why Do People Bother Starting a Business in the First Place?
Most experts agree that many people start their own business because they hate working for a boss and would rather work for themselves. At the same time, as Laith Pahlawan from Orange Crew notes, some entrepreneurs are simply disillusioned by businesses in their field. They believe that they can do a better job than existing companies. Additionally, many people think that starting their own business is a good way to earn lots of money.
What’s the Biggest Mistake People Make When Starting Their Own Business?
Nick Allo from Semtech IT Solutions points out that one of the biggest mistakes people make is starting a business without a sound financial plan. Such a plan includes not only the funding needed to get a company off the ground but also money to live on.
It is also necessary to have a plan outlining how you, the business owner, will get paid. Ilan Sredni from Palindrome Consulting seconds Mr. Allo’s emphasis on a financial plan. He also points out that it’s imperative to include marketing as an integral part of any financial plan.
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Getting a business off the ground without a marketing budget is extremely difficult. Bryan Ferrario from Alliance Technology Partners points out that starting a business without doing proper market research is a huge mistake that any aspiring business owner will want to avoid.
Anyone considering starting a new business should know some essential metrics. These include the market demand for potential products or services. Also, new business owners must know the average rate charged for the products or services they plan to offer.
The research doesn’t end there. A ton of research is in order to ensure the business launch is ultimately successful.
Laith Pahlawan states that one big mistake is to treat one’s business as they would a self-employed contracting job. In other words, some new business owners think they will provide a service, get paid for it, and that’s that.
However, that’s not how a business works. A business is scalable. It includes expansion, which means paying attention to sales, marketing, human resources, and so on.
When Should a Person Build a Company?
Many people who prefer self-employment to traditional employment start by working in the gig economy before setting up their own companies. This is a wise move. It can help a future business owner get to know the industry. Gig work also provides networking opportunities. These offer leverage once the new business is launched. However, those transitioning from gig jobs to launching a company need to know how to tell if the time is right to make the switch.
Laith Pahlawan states that an entrepreneur should make the switch when they have a large enough order or contract to build a business infrastructure and scale the business up.
Bryan Ferrario, on the other hand, states that a person should seriously consider if moving from contracting to running a business is a good idea at all. He notes the difference between starting a new business or just being one’s own boss. Those who have an in-demand skill but don’t want the hassle of hiring and working with employees may find that contracting is the better choice for them.
What Is One Thing You Would Have Done Differently?
Laith Pahlawan comments that he wishes he had started his business with a partner rather than on his own. A partner can provide motivation and assistance that can make the challenging process of launching a successful business much easier. Alternatively, those who cannot find a suitable partner may want to get support from a mentor, supplier, sponsor, peer group, family member, or friend.
Bryan Ferrario, on the other hand, found that starting a business with two partners who weren’t committed to its success was a big mistake. He notes that there needs to be a clear agreement between partners. Such agreements should specify:
- roles for each business partner
- how each person will be compensated
- profit distribution among partners
- how shares in the business are to be handled in the case of death or departure.
A Final Note
Are you considering starting your own business? If so, consider the advice outlined above and adapt it to suit your needs. Doing so can increase your chances of success while helping you avoid difficult, time-consuming problems and situations.