Entrepreneurship is, in many ways, much more than just a way of building a business. It is a journey that is wrought with many risks, learnings, opportunities, and more. Thus, with so many different minute aspects involved, it definitely isn’t surprising that several entrepreneurs make a lot of mistakes when starting their entrepreneurial journey. While making mistakes is an inevitable part of such an endeavor, many of these can be avoided, by having a sound understanding of the business and clarity regarding the process. The following are the ten most common mistakes made by emerging entrepreneurs, which might just prove disastrous for a business:
Over dependency on others’ advice
Listening to too many people often ends up diluting one’s own business vision. While feedback and criticism is critical to stay grounded and objective, one must also remain clear and confident about their own goals and the way to achieving them. Only then will they be able to separate the useful advice from the rest, and implement it.
Getting lost in the data
Data and analytics are meant to provide a guideline for how to proceed in business and the targets to be set. However, over analyzing markets and data can also result in one getting stuck in a limbo, and unable to look beyond the numbers. This becomes a huge barrier for innovation, and ultimately, drowns the business in stagnation.
High investment – narrow profit margin
At the end of the day, revenue creation is the primary goal of all businesses. Investments, therefore, must take into account the projected earnings, and ensure a sustainable profit margin, from the very beginning. Many entrepreneurs make the mistake of starting businesses with a high investment and narrow profit margins, only to end up in bankruptcy.
Over dependency on technology
While leveraging technology can offer a wide range of strategic advantages for a business, especially in today’s highly competitive market, an overdependence on the same can just as easily cripple it. A balanced use of technology and human resources, with defined contingencies for both, is key to facilitating a sustainable business.
Losing one’s personal touch in business
In the pursuit of perfection, it is easy for entrepreneurs to be so deeply involved in the mechanization of business procedures, that it loses the personal touch. A business must, hence, ensure it continues to connect with its customers and takes into consideration the human aspect, to retain them and appeal to newer customers, as well.
A premature expansion can cause a business to collapse just as easily as it has grown, if it is unprepared to manage the changing requirements that accompany it. Projections and analysis-based capability building and strategizing, must therefore, be mandatory to ensure the successful expansion of a business.
Starting a business with no personal skills
For an emerging entrepreneur, the appeal of diversifying their business endeavors should not overrule their lack of knowledge and expertise in the field. Before choosing a domain to conduct business in, they must work on skilling up and gaining practical and detailed insights about the market, existing players, challenges involved, skills required, and more.
Human resources will continue to be vital for the smooth functioning of a business, but overstaffing can, instead, make it a loss-making venture. An analysis based strategic business plan, must account for the required human resources, and the cost incurred, against the revenue turnover that is expected.
In order to prevent a burnout of funds, a business must also have a clear plan for its expenses. While indulgent expenses in marketing and production might provide a temporary boost, not adhering to budgetary allocations can leave the business bankrupt, just as quickly.
Lack of planning
For an entrepreneur, planning and organization are vital to managing their business efficiently, as well as their personal lives. Before attending to business obligations, one must also ensure that they set aside time for something they enjoy, to be able to sustain themselves in the long run.