What is the Most Common Mistake New Entrepreneurs Make?
Undercapitalization of their business.
Great Ė what does that mean? That means that a business fails because of poor financial planning and because of not having enough capital in place to cover operating expenses. Basically you go into business, start advertising, get your extra phone line, get the necessary office supplies and equipment, etc. and if you donít achieve microwave results, you will find yourself in a situation a few months down the road where you cannot afford to continue operating. The end result is you are finished before you even get started.
Many internet and network marketers do not come from a business background and are lured in by promises of a turnkey system, where you simply plug in and follow the leader so to speak. This is one of the great things about internet marketing in many cases; however that system needs to be complete with a business plan. Your sponsor should be able to sit down with you and conduct a six month business plan that leaves nothing to chance. Every expense should be accounted for, and a conservative estimate of your income should be used so as to project your overall success six months out. Once these steps are taken, you are now able to decide how best to capitalize your business so that you know exactly how much you are spending each month to operate and where that money is coming from.
There are numerous ways to capitalize your business i.e. small loan, home equity loan, credit card convenience check (typically with a low interest rate for 6 months) and your sponsor should also be able to identify these for you so that you have a number of options available. Be sure to spend some time exploring your options to come up with the best possible solution for you.
If you are researching network marketing companies, do your due diligence and make sure to include in your list of questions whether your sponsor will conduct a business plan with you. If you are starting out in other avenues of e-commerce or internet marketing, it might be wise to consult with a financial planner or an accountant. Whatever business you choose to get involved with, make sure you capitalize your business. It is an ingredient that could be, and in many cases is, the single most important key to your success.
For the vast majority of people, having too much money is just as, if not more, dangerous.
If you have money in the bank you will throw money at the problems you encounter and learn nothing.
Don't get me wrong, having adequate startup capital is nice, but often it is just an excuse to not get in the game.
I'd say one of the most common mistakes is falling in love with the idea of a certain business before accurately figuring out if there is an actual market for what they'll be selling.
Losing a couple thousand on market analysis to find out the business can't succeed in a particular market is much better than losing a life's savings in starting up the company and letting it slowly drain it away.
Some small mistakes
There are many small mistakes that new entrepreneurs make as well.
1. Trying to do everything themselves vs outsourcing non key items
2. Focusing on non critical items.
3. Being too tight on some things such as business cards but then splurging on the fastest computer.
4. Being indecisive. You must be able to keep moving and not get bogged down on one decision.
5. Dreaming. We all dream about the big items and we fall in love with the great possibilities but you really should be in love with the process instead.
6. Not creating systems. IMHO you should create a procedure and system as best as you can. Set up auto bill pay, etc. These little things help you manage your business with as few people as possible.
I'm doing quite a bit of those mistakes, but I wouldn't if I had the money. If i had the money to outsource some othe things I can I would, but until I have the money I do it by myself. Also a part of it is I can say to myself, "I started 100% all of this on my own" and once it's started, then hire other people.
Hmm...this looks like a laundry list of my actions since I quit my job last year :) But since you learn from your mistakes; I'm glad that I am making them now!
hmm. a lot of errors
i have made a lot of errors yet,but i am glad they were all at a low investment level,but as i am learning i am moving to more and more. the list above is helpful espscially undercapitalization is the mistake,everyone should avoid.:)
Somebody I spoke to recently had a nice analogy for it, which I've forgotten. But I think it's more to do with a failure to balance the fun stuff with the nitty gritty, the value-add that that brings in your daily bread. A writer, for example, would be crazy to think they can make a living just writing about their travels and selling it to the national newspapers. It's just not enough on its own. But if they start out with a more realistic outlook, then it's no problem. If they are willing to do some less glamorous activities, which are well paid, then they can enjoy the best of both worlds and make a good living.
One of the most appealing aspects of being self-employed is that you are in control of your own time. There is so much abundance there, and so much potential. Why limit yourself to one specialism?
Which takes me to my final point - time management. 'Nuff said!
The biggest mistake I see time and time again is entrepreneurs overestaimating the demand for their new widget. The second is waiting for someone else to come along and do the actually sales.
cashflow, cashflow, cashflow that is usually the reason why new entrepreneurs fail. Lasksmi Mittal, the steel billionaire, who is one of the richest men in the world holds conference calls with his managers every day so they can tell him the daily steel sales regardless of where he is in the world, he does this without fail. He has said it is the most important activity of his day
Don't extend credit..if the buyer doesn't have money, do a barter transaction. Keep your costs small. Don't waste money on letterheads..it's unnecessary
The idea or product is great but it's not marketable! Most of the time it's too expensive or not really in demand.
I also think that new entrepreneurs should really take time to conduct a market analysis before starting out the business.
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I think there's a long, long list...
-Falling in love with the idea, the technology, the concept rather than the result/benefit to the buyer.
-Working in the business instead of on it.
-Rigid, inflexible thinking. Not willing to change and adapt (you saw this when the internet first came along). Resistance to change.
-Not differentiated from the start. No compelling reason to buy from them vs their competitors.
-Trying to do too much; trying to do everything and appeal to everyone.
-Believing too much glamour and too much hype. It's not all romance.
-The product just isn't practical (like the Segway scooter). Just too expensive for most people.
Most common mistake is being afraid to fail...
Staying around people that don't support you will kill your drive with a quickness.
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