New Entrepreneurs: Watch Out for These 4 Missteps
With a new business, you're likely to encounter a speed bump or curveball. But as advised by other business owners, you should be aware of the missteps that can happen.
Talk less. Talking comes easily to most new entrepreneurs and business owners. They've spent a lot of time pitching your ideas and new business.
However, when you only focus on what to say or should say in meetings with staff, vendors, or potential investors, you become a person doing all the talking. And that can mean you're not listening.
Because successful entrepreneurs need to pay close attention to what is said, says serial digital entrepreneur Ben Lamm, founder and CEO of Colossal, this can result in mistakes.
"It's not enough to have what you want to say all figured out," he writes in a post for Entrepreneur magazine.
Make sure you're willing to hear what other people want to tell you as well as they may have added insight, Lamm adds.
First-time business owners should develop their "active listening" abilities because they are an important leadership and business development tool, says Lamm, who founded his first company in 2004 and started six others between 2010 and 2022.
Making room for others allows your staff to feel heard and may introduce you to innovative ideas, he writes.
Lamm's advice: Maintain eye contact, refrain from interruptions, postpone making snap decisions, and only ask questions when necessary. Additionally, stay in the moment and avoid allowing your thoughts to wander to your reply.
Keep watch for possible financial risks. New entrepreneurs are more than aware of the financial risks that come with a startup, but it may be difficult to spot the "set up" to the risk.
For instance, if one or both of your clients decide to stop using your services, your financial risk could be high, according to a piece by John Boitnott for American Express' Business Trends & Insights.
"Start marketing your services to diversify your base so the loss of one won't devastate your bottom line," he says.
Be cautious about your own company's debt load or interest rate fluctuations, and if you're extending credit to customers, the article says.
Keep your debt to a minimum and make a strategy to start paying it off as quickly as you can, Boitnott writes in the post.
Turn mistakes into lessons. It's imperative that new entrepreneurs learn from their errors and develop insights from their early setbacks.
Not having all the answers when you're starting out comes with the territory of starting a new business, says John Thornhill, Innovation Editor at the Financial Times.
Thornhill, who's also the founder and editorial director of Sifted, the FT-backed site for European startups, adds that you're bound to make mistakes, which is part of the process.
"All startups are a trial-and-error game," Thornhill writes in a Financial Times story.
He notes that it's natural to fail in many little ways, but hopefully not fatally. Thornhill says the most crucial thing is to make an effort to learn from your errors.
Don't underestimate a plan. Some new entrepreneurs do start a new business without a formal plan, i.e., startups that never needed to pursue a loan or other funding or solo entrepreneurs who started out part-time.
But if you're among those who started out without a business plan, consider making one now.
Launching a company without a strategy is like to embarking on a 50-mile wilderness journey without a GPS, writes Caroline Castrillon in a Forbes blog, adding that you'll eventually become lost and might not be able to escape.
When compared to otherwise equivalent non-planners, entrepreneurs who make formal plans are 16% more likely to reach viability, Castrillion writes, citing a Harvard Business Review study.
According to the SBA, a solid business plan helps you through the stages of starting and running your company.
"You'll use your business plan as a roadmap for how to structure, run, and grow your new business," the agency advises. "It’s a way to think through the key elements of your business."
A business plan doesn't necessarily have to be an official or even elaborately detailed document.
An effective business strategy can be written in any manner. It's crucial that your plan accommodates your needs, the SBA says on its website.