Every second hired worker thinks about opening his own business, but a little more than 20% decide to take real steps. Half of those who do start a business lose interest as soon as they face the first difficulties. We’ve counted five common mistakes of aspiring entrepreneurs that keep your dreams and ambitions from coming true.
Mistake one: Lack of specialized legal knowledge
An entrepreneur not only needs to know his product or service and how to promote it but also needs to have at least a general idea of the laws that regulate business. In the process of activity you will gradually begin to understand these issues, but at the start of business mistakes by novice entrepreneurs when choosing a legal form, tax regime, registration of employees, relations with partners or can lead to serious financial losses and even become fatal. For example, you can start with such questions as to how to file taxes with your last paystub.
Mistake two: Lack of a plan of action
A business is like a car; it only rolls downhill by itself. If you have no idea what exactly you should do and what you will be paid by the client or customer, then it is too early to start taking real steps. Study all available information related to your business: business plans, books, and articles, franchisor proposals, real cases, tax forms like w2 online or what is a 1099 form, etc. If you have the opportunity to work, at least temporarily, for a company that works in your chosen field or a related one, then by all means take advantage of it.
Mistake three: Not understanding your target audience
Another mistake aspiring entrepreneurs make is not understanding their target audience. There is a category of business people who only want to do what they like themselves. For example, you are fond of sports, so you want to open a mountain equipment store. But think about it – are there enough paying customers in your area, interested in such goods? Maybe you should open a store of soccer goods, whose audience is much wider, and mountain equipment, since it is so to your liking, sell only to order?
Mistake four: Not knowing how to sell
Every business is about selling. You make a profit only when you can meet the needs of your customers or clients. But the benefits of your service or product need to be delivered to the consumer. Think about what advertising channels you will use and what marketing techniques you will use. If you open a store in a popular mall or provide a popular service, your advertising costs may be minimal. Nevertheless, it is necessary to think about how you will promote yourself in the market.
Mistake five: The inability to dispose of the money
If you have solid start-up capital, there is a temptation to spend it “for the good of the business”. Some beginning entrepreneurs (although there are fewer of them every year) are too keen on the trappings of business: an office in a prestigious location, an expensive company car, a corporate website with a custom design, etc. As an excuse is given the fact that such expenses are the formation of image and reputation. In fact, start-up capital should be spent on organizing the first sales, building a customer base, improving the quality of the product or service, and establishing business relationships.