5 Business Mistakes to Avoid as a New Entrepreneur

Starting a new business is both an exciting and intimidating prospect. There’s so much potential behind any venture. Unfortunately, there’s also plenty of risk. While it is impossible to control all the odds, there are things new entrepreneurs can do to help even the odds.

For example, taking the time to research and consult with experts is always a smart move. Listening to those who came before is the best way to learn the common mistakes so you don’t have to experience them personally.

Remember that mistakes happen - so don’t beat yourself up about them. Yet, there’s no reason to repeat these five common business mistakes. Read below to learn more about what not to do.

Mistake #1: Failing to Create a Business Plan

Business plans are a critical and foundational aspect of any business. Don’t believe us? Look to the businesses that failed, especially those that failed early. The odds are good that many companies didn’t have a business plan.

Why are business plans so important? It is essentially a company outline explaining the goals of a business, including details on how to achieve those goals. Likewise, it should contain all vital information about a business, such as its research, marketing strategies, funding, and products/services.

There are several reasons why a business plan should be one of the first actions completed when designing a business. First, it can play a significant role in securing investors. Remember that investors are more likely to be tempted into funding a company that seems thoroughly thought out and researched.

Second, a business plan should include emergency and contingency plans. These plans can help a business function when something happens, allowing everything within the company to continue moving forward.

Mistake #2: Doing Everything Alone

People often like to think that entrepreneurship is a one-person show. While a single person can run a business, the likelihood that they are outsourcing to other professionals is high.

For example, successful entrepreneurs know when to employ additional help, approach vendors for supplies, and hire industry experts. Conversely, many new entrepreneurs make the mistake of thinking they must do everything alone. This inevitably leads to failure.

Mistake #3: Hiring the Wrong People

Another common mistake in entrepreneurship is hiring the wrong people. We’ve all seen it - a new business owner hires a friend or family member over a more competent stranger. The result can get pretty challenging if not handled promptly.

Entrepreneurs must hire the right people. Hiring the wrong candidate can slow down a business or cause other significant problems. For a small business, these seemingly small mistakes can grow exponentially. This is why entrepreneurs should take their time and hire the right people the first time around.

Mistake #4: Going Outside of Your Expertise

When researching advice on becoming an entrepreneur, you’ll likely see “stick to your area of expertise” come up repeatedly. There’s a reason for this. When one is an expert in their industry, they are more likely to succeed. They’ll notice potential business opportunities and recognize speedbumps before they become a problem.

In other words, a business will do better when you know what you’re doing. For example, an artisan is far more likely to succeed in a business related to their craft. It would be counterproductive for them to try and open a business in an unfamiliar industry.

Mistake #5: Poor Record Keeping

Record keeping may not be the most exciting part of running a business - but it is critical. Unfortunately, this is a pretty common mistake first-time business owners and entrepreneurs make.

Maintaining perfect records takes time and can be tedious to some. So, it is easy to understand why it may go by the wayside, especially for businesses that don’t have a position solely for record keeping.

Entrepreneurs who make the mistake of neglecting their records will pay the price, sometimes literally, come tax season. Nobody wants to be chased by the IRS. Remember this when starting a new business, and start with a solid record-keeping system.