10 common mistakes to avoid as a new entrepreneur

Every entrepreneur is going to make mistakes, especially new ones. That’s why I’ve put together a list of 10 common mistakes new entrepreneurs should avoid. Some of these mistakes are ones I made when I first started running my business.

Setting impractical goals

When I first started with LEO Digital Marketing my goals were to become the biggest marketing agency in the Midwest within 5 years. In year 4 I’ve had to downsize and shift focus so becoming the leading agency in the Midwest probably isn’t going to happen. But by setting such an impractical and ambitious goal I kinda set myself up for failure. Which is why I am having to downsize and refocus. If I had made a more practical set of goals for 5 years then things might be different as I would have planned differently and used different strategies. If you plan on running a successful business then you’ll want to avoid setting impractical goals. Instead, do some research and find out what others in your industry typically do or where they are after 2, 5, and 10 years and set your goals to be more in line with where the industry is.

Lack of marketing

A major mistake that I see new businesses make is not incorporating marketing into their business. As a marketing agency owner, I’ve called up businesses that have had little to no marketing to try and pitch them on hiring my agency to tackle the task only to be told that they didn’t believe in that kind of thing. What kind of business owner doesn’t believe in marketing? The kind that will go out of business because people don’t know their company even exists!

Too small of margins

A common mistake that new entrepreneurs will make is selling a product with low margins. This causes the business to either have to raise prices or sell way more products to stay afloat. Well, people usually avoid products that are high priced so raising prices can result in selling less which means you may have to sell way more products. But, depending on what products you’re selling it may not be possible to sell more of them than what you are already selling. Imagine for a moment that you own a store in your local city or town with a beautiful storefront. In that store, you sell handmade bowls, plates, and similar products. Let’s say you make $3 a sale per item sold. You’re going to have to sell a lot of bowls and plates to afford the lease on your storefront along with utilities, insurance, and all the other costs of running a business. So, what do you do? You raise prices. But now you are selling less because not everyone has the money to buy your products causing you to bring in less money. So you shift focus and decide to try and sell more products. But it’s already a challenge to sell products in general let alone trying to sell even more. All this chaos and headaches because you have too small of margins on the products you sell. By simply ensuring that your margins are as high as the market will allow you can give your business the best chance of bringing in enough revenue to keep the lights on.

Being afraid to take the next steps

There is a lot of uncertainty in running a small business. That uncertainty can lead to fear. Don’t let it. I understand how taking the next steps in growing your business can be a mix of emotions with some fear in there as you think to yourself “What if it fails and I’m left with this?”. If you make smart moves and at the right speed and time you’ll have nothing to worry about. But, sometimes there is never the right time or speed and it’s a choice between potential growth or stagnation. My suggestion is to write a pros and cons list to weigh your choices.

Not knowing who the competition is

This one has always baffled me. One of the first things I did before even filling any legal paperwork for my business I looked around my local area for direct competitors. I have an entire list of them in my Google Drive with their contact information, social media accounts, and team member names. Knowing who the competitors are is a must. You can study what they do to see what works. You can “spy” on them to see if they are doing things you should be doing. Not to mention that these are the people who your ideal customers are going to consider giving their money to instead of you, so knowing who they are is important as you can now make yourself stand out to be a front-runner for customers.

Unorganized back office

You might be asking yourself “Seth, what does this even mean?” Your back office is where all your important documents are. It’s the accounting, the ordering, the sales numbers, and more. Being unorganized is going to add stress, waste time, and slow down your business. By keeping everything organized and easily accessible you can cut down on wasted time allowing you to put more energy into running your business.

Not keeping up with the books

When I first opened my business I didn’t keep up with my books. I had to scramble at the end of the year to get everything organized so I could file my taxes. I knew where my money was coming from and where it was going so I didn’t think about how I needed to keep it recorded in QuickBooks. As it turns out, that ended up costing me more than I could have known. It cost me hours of time, it cost me peace of mind, and it cost me when it came to taxes since I didn’t have the time to work out every detail for max tax benefits. Avoid the stress and costs by simply keeping up with your bookkeeping at least monthly.

Not knowing who your target market is

This is a devastating mistake that new entrepreneurs will make. They have a rough idea of who they want to sell to or even a broad idea of those people. But, if you want to be successful you need a detailed description of who your target customers are. That description needs to include things like gender, age, location, income level, interests, and more. When I begin working with a new client I always ask them to describe their target market and ideal customer so my team and I can create a marketing plan and strategy that is attractive to those customers. A handful of those clients have responded with an answer something like this “ My target market and ideal customer are people who like {Product that I sell}”. That description isn’t going to take you anywhere. On the other hand, I’ve had clients respond with answers like this “My target market is women between the ages of 25 and 50 who live in Ohio and Texas that run a small business.”. When sitting down to make your target market description, aim to be like the second client.

Not filing the right legal paperwork

A huge mistake to avoid is not filing the right paperwork with the state or even worse, not filing any at all. By not filing the right forms you could be setting yourself up for massive risks both for you and your business. The same goes for not filing at all. If you’ve ever signed up for a course from someone who is going to teach you to start a business oftentimes you’ll see that they don’t cover this crucial step. If you aren’t sure what to do or how to file then I recommend you call the state or visit your local Small Business Development Center (SBDC) to ask for assistance. The great thing about the SBDC is that their services are free.

Not having a plan

This mistake isn’t as common as the rest but is still something that people getting started struggle with. Often times entrepreneurs will have a plan but it is missing some key ingredients to make it work. Usually, the plans include the goals and a few bits of information on how they are going to get there. What your plan should include is the goals and a detailed game plan on how you’re going to make it happen. It should include your marketing plan with details on how you will use it to convert to sales. It should also include a sales plan where you describe how you’ll turn leads into customers. When you start creating your plan make sure to be as detailed as possible. It’s better to have too much information than not enough.

If you’ve read all the way through to the end then you’re one step closer to becoming a successful entrepreneur. If you think this blog was helpful make sure to share it to your social media and tag me for the opportunity to win a free 1-on-1 strategy session.