The dream of starting your own business is common among people who dream big and aspire to be more than just the average employee for someone else. Even for those who work up the courage and make the leap though, there are many pitfalls along the way that most don't anticipate and sometimes don't have the knowledge or will to overcome.
Whether you're opening a brick and mortar restaurant, a retail store, or a spa, the small business mistakes you need to avoid are relatively the same. I've been chatting with some local small business owners lately to get their insights on the topic. There were obviously some niche complaints (cheaping out on equipment, buying the wrong product, not investing in social media to start off, etc.) but for today's post I'm going to outline some common mistakes, the more broad and global ones, and try to lend some insider guidance on either avoiding or fixing them.
1. Not Having the Stamina
"I want to own a business" doesn't cut it as a driving force behind entrepreneurial activity. Unless you have a dream that is bigger than whatever obstacles get thrown in front of you on the way, you could be doomed to give up and go home. This is one of the primary reasons that 80% of new businesses fail within the first three years, and it's not something that can really be taught.
If you don't have a fire inside that drives you to figure out how to overcome and persevere in the face of the problems and adversities that will come up, you won't make it no matter how good your idea is.
2. Hiring the Wrong People
One of the top books I recommend to any entrepreneur or business owner is Good to Great by Jim Collins. The entire book is required reading for business success, but one of the most impactful chapters is the one on getting the right people on the bus and getting them in the right seats.
If you know everything there is to know about front of house operations, accounting, customer service, management, working behind the line, or any other position or skill that your particular business may need, then you must be half human, half machine!
Instead, do like Abraham Lincoln and surround yourself with people smarter than you and better than you in their respective skills. That's the hallmark of a smart leader and good business manager.
3. Ignoring Networking Opportunities
The website NextAvenue has an excellent article which details some of the types of people that are important to find when launching a business. Among them are the types I just listed and more, with catchier names - Operations Master, Tech Guru, Financial Whiz, Sales, Marketing Superstar - but again, your business will have it's own needs as far as what positions are required, so adapt this list appropriately.
Two more on the list are sometimes overlooked or disregarded by the rugged, individualistic business owner who wants to make it on their own, but they are really vital: mentors and peer groups.
Mentors are an important part of life in any aspect. Having someone you meet with regularly who has already been down the road you are traveling is like having a map drawn out before you embark to make the way easier. Ignoring this incredible resource is a poor choice.
The peer group idea is very similar, but even more advantageous. Getting together with local chefs or other business owners gives you a sounding board to bounce ideas off of and offers you a group of similar-minded people who are going through the same things you are.
4. Not Vetting Your Plan
One idea in a recent article about decreasing your chances for startup failure lists the idea of validating your idea with 50 potential clients before you ever spend a penny on the business.
As an aspiring small business, you might not have “clients,” but who says you can’t start a food truck before launching your brick and mortar restaurant? Or perhaps a pop-up shop at local craft fairs and flea markets before setting up a storefront?
People think they have the greatest new idea in the world when they begin their journey to starting a new business, but unless the consuming public agrees with you, you're going to run into snags and business pivots along the way.
5. Counting on Free Money
Think logically about this for a second. Over 80% of new businesses fail within a few years, and that's a statistical fact. If you were a bank, how likely would you be to loan money to something where there was an 80% chance of a loss? Exactly.
Don't count on bank loans when you are starting out. If you get them, that's icing on the cake, but plan on spending your own money. That will make you think more critically about every decision. You can always look to angel investors as well, but realize that the competition is thick and most are looking for the newest in high-tech solutions.
There are plenty of alternative business financing options, but one way to avoid unnecessary costs up front is to find free or inexpensive solutions to basic needs (Legalzoom, Google Voice, Swipely's credit card processing & loyalty rewards program, etc.)
6. Sacrificing More Than Just Time and Money
One final, but very important, point needs to be made. You MUST get buy-in from your spouse, friends, and family. Starting a new company is not a weekend hobby. It requires blood, sweat, tears, money, and a TON of time. If your biggest supporters in life are not on board and fully in support of your plans, you are looking at a very hard road ahead that could lead to heartache. There is nothing quite as satisfying as starting your own business and seeing it flourish, but some sacrifices aren’t worth their weight in gold.
Now it's your turn, what are the biggest mistakes you made or have seen that new small business owners should know?