5 biggest mistakes that new business owners make
As a business coach, I’ve worked with thousands of new businesses. It’s amazing how you can almost predict the mistakes they’re going to make because the same issues appear time and time again.
First up - an over-obsession with business plans.
In my experience, most new businesses tend to get far too caught up in the planning stage. I believe there are 4 steps to a key business:
Start with a big dream.
1 - Plan.
2 - Do.
3 - Take Action. (this is the most important stage)
4 – Review.
Taking action and then taking on board the lessons from doing so is key to making sure that your business succeeds. However, many new business owners spend far too long in Step 1.
They get too wrapped up in the minutiae of the business plan, trying to make sure that their projections are absolutely perfect, and that the plan is presented nicely. But they neglect (or never allow themselves to reach) the most important part: actually taking action and moving forward with the business.
A plan is important, but the reality of any plan or projection is that it’s just a guess. It’s an educated guess, hopefully, but still only a guess, and it can always change as time goes on. It’s a working document, not a script. Taking action will teach you far more than a projection ever could.
#2 mistake: idealistic assumption.
Often business owners tend to believe that the technical knowledge they’ve got – how they do what they do, how they’ve built their product, how they’ve delivered their service - is sufficient for them to build a secure business around it.
But it’s not true.
You may be an expert in what you do. However, an IT consultant is an expert in IT, not in running a business. A carpenter may be talented, but that doesn’t mean their business will necessarily be a success. When you run a business, you are effectively in the job of running a business. You’re not in the job of the carpenter or an IT consultant – or at least, it’s not your primary responsibility. Number 1 is running the business. Do your research on how to run a business successfully, and don’t assume technical knowledge alone will make you a success.
Next, I see business owners relying on promises from friends and family.
They believe that those good wishes and best intentions are actual promises to buy. And then the reality kicks in - they start their business, but friends and family don’t invest.
If you’re starting a business, you need to make sure you don’t just ask people if they like your product, or whether it’s something that they would buy.
Instead, ask them to actually put their hand in their pocket and buy it, because that really does sort the wheat from the chaff.
The fourth mistake I see frequently is the pursuit of perfection.
Similar to point 1 with the business plans, when it comes to actually build a product or delivering the service, business owners look for absolute perfection.
Rather than going forward with a minimum viable product (MVP – startup lingo) - they look to tweak it to the nth degree.
They try to ensure that the product is far better than any others out there.
This leads to a situation exactly the same as when you get caught up in that planning stage: business owners tend to over-obsess on details. Details that the customer most likely wouldn’t even notice.
A better course of action would be to get it to market, see what its reception is like, then adjust accordingly.
Here, “Ready, Fire, Aim” is actually more appropriate than “Ready, Aim, Fire”.
Get it out there, see what works and see what doesn’t. You can adjust accordingly, and pivot further down the line to make sure that your product is actually a success.
But if you don’t do anything but obsess over the details, you won’t get anywhere.
Finally, the fear of funding.
So many business owners are concerned about funding their new venture beyond their own personal reserves. They’re worried about getting financing or equity financing.
Whilst it’s very admirable to build a business organically, (I have done it myself) to reach true scale, you should actually probably source external funding.
All of these businesses that you see that have done well for themselves – Netflix, Google – they’ve done it with other peoples’ money.
Most people seem to have a deep-rooted fear of taking on debt.
It could be that they don’t understand the difference between good debt and bad debt.
It could be because of something they’ve heard online.
Perhaps they’ve previously been in personal debt themselves.
But to truly grow and scale your business, you need to make sure you have a sound understanding of good debt.
Ensure that you understand equity and finance and don’t be afraid to use it when appropriate.
Those are my top 5 - nail these and you're setting your business on the right path. Any questions? Fire away - on most social media as @CarlReader.