National entrepreneurship day: 10 mistakes entrepreneurs must avoid
Entrepreneurship – A trial by experience
Being an entrepreneur is challenging and exciting at the same time. It is a balancing act between risk and reward. When you take risks you can sometimes make mistakes and through these you can learn important lessons about being an entrepreneur. And be rest assured you will err from time to time, despite your best efforts, especially when you are running a business for the first time.
However, in a business ecosystem as booming as India, with more than 77,000 recognized startups and more than 7.9 million micro, small and medium enterprises (MSME), too many mistakes could mean D-Day for your enterprise. The key to avoiding and mitigating business critical missteps is to observe and learn what to do instead.
Today, we bring to you a list of some of the most common business slip-ups to take note of and avoid.
Not preparing a thorough business plan
A business plan helps a company define and achieve its goals. Without it, it is very likely that you won’t be able to outline your company’s objectives and neither develop any plans to achieve them. The absence of a business plan could also lead to total lack of coordination between various business functions such as marketing, finance, operations, etc.
Not defining your target audience and market
This is one of the most common mistakes among entrepreneurs. Without taking the time to understand the market or customers you can never build the right product or service. To know if you’re on the right track you must constantly seek feedback from current or prospective customers.
Being unaware about legal requirements
Understanding legal requirements about starting or running a business is crucial. If not done properly, the lack of legal awareness could cost your company valuable time and money. Some of the most common legal mistakes entrepreneurs could make include – not registering their business, not evaluating the contracts properly, partnering with the wrong companies and not safeguarding their intellectual property.
Lack of research about investors
Don’t choose your investors in haste. They are much more than individuals/groups who invest money in your business idea. Choose investors who have a solid track record of enabling entrepreneurs. Avoid working with potential investors who don’t share your values or with whom, you sense, there could be a conflict of interest. Additionally, only opt for investment when you absolutely need them.
Ignoring capital requirements
Entrepreneurs should be cost-efficient but not misers. Never mistake capital management as a back office function. Neglecting finance could negatively impact the performance and outlook of your business. If you don’t pay attention to your capital requirements then you won’t be able to manage your company’s costs, cash flow, invoices, assets and liabilities, taxes and payroll, etc.
Startups and SMEs, despite their extent of funding, cannot be irresponsible with their cash flow. If you are careless with your expenses then your business won’t be able to sustain, let alone grow. Wastage of money can prevent you from hiring and sustaining the employees, maintaining your inventory, paying the suppliers, reaching new customers, etc.
Launching and expanding too soon
Don’t be in a hurry to launch your business. You need thorough market research to bring your idea to life. You may think you have a path breaking idea but without proper planning it will lose steam. Similarly, if you expand your enterprise without ensuring you have a solid base to build on, the business model could implode. If you try to grow too fast, it will have a negative impact on your company’s financial health.
Ignoring the competition
No matter which industry you operate in, niche or saturated, there will always be a competitor. Businesses that don’t acknowledge their competition are more likely to fail than those who do. Analyse the market, find out who your competitors are, prepare your strategy and execute.
Not creating a 360-degree marketing communications plan
Never underestimate the role of marketing, public relations (PR) and social media in ensuring the success of a business. If you ignore their importance, you won’t be able to market your idea or acquire new customers. PR and social media are also critical for ensuring good relations with customers, government stakeholders, and influencers.
Underestimating the benefits of networking
Networking is the oldest trick in the book for a business owner. Even in the digital age, nothing opens up business opportunities like peer-to-peer interaction. Through networking you can get counsel from seasoned professionals and contemporaries about product, strategy, raising money, business development, etc. Additionally you can also discover opportunities for new leads and partnerships.