First time entrepreneurs are like cubs introduced into the jungle and have to learn ways to survive and in the process invest their time and money in ways which could yield bad returns. If you just started your company in any industry, the likelihood of repeating any of these stated mistakes is possible.
The membership of TSH Facebook Community helped to identify the cardinal mistakes first time entrepreneurs make which always lead to their early demise. Read to identify your own mistakes.
According to Judith Zormelo Quartey, Banking Consultant, these are the mistakes first time entrepreneurs make;
1. Not having a plan means planning to fail.
“Sometimes, the lack of a thorough understanding of the business one is embarking on leads to failure. For example, you like to eat Waakye (rice & beans in Ghana), so you buy waakye everyday, so you assume if you start a waakye business it will succeed. There’s more that goes into Waakye selling than meets the eye.”
2. The trap of over trading.
“One starts a business and begins to do well. Sales are going well and lots of demand for your product/service. You get excited and suddenly forget your budget, your limitations and overstock or over produce and over extend yourself. It then becomes a huge struggle to meet demand and other obligations as they fall due. Your cash cycle goes askew, debtor days and creditor days are out of syn. Usually in the beginning, the banks may lend to you but once they perceive you have a problem, they pull the rug and you are in trouble. Don’t make sudden increases without a thorough PEST & CO analysis. A good SWOT and other scenario analyses. Always do a sense check and listen to your 6th sense.”
Co-founder of Storefoundry, Edem Kumordzi identifies two more mistakes by first time entrepreneurs;
3. Allowing business plan to make you narrow-minded.
“… it’s worth pointing out that having a business plan from day one assumes that you are confident your product or services are exactly what customers need. In some cases it works, in other cases, I’ve seen people with this kind of planning fail because they became narrow minded, they couldn’t adapt and change fast enough all because they wanted to do everything just like they planned it. In these days when customer behavior is so unpredictable, what I wish I knew before I started my entrepreneurial journey is this: When you find a problem you want to solve, don’t take people’s word for it, dig deeper and identify the true problem. Because what people describe as problems generally is actually the pain of the real problem. When building a product, seek constant feedback from those who are likely to use it. You will be surprised about how wrong you were about the assumptions you made. And always be ready for change. Never get comfortable.”
4. Hiding business ideas from people.
“Hiding your ideas from others is the worst thing you can do. Sharing your ideas with as many people as possible gives you a lot of insights about things you didn’t think about. So think about it, if you share your idea with 10 people who gave you 10 different insights you become more informed about how to execute it. The reason why people are scared of sharing ideas is because they are scared of competition. But here’s the thing, the idea you have isn’t that great. There’s nothing new under the sun. Whether you share it or not there will always be competitors out there. So that’s something you should be ready for and embrace. Ideas are great but execution is everything. Get as much feedback about your ideas before you start executing.”
Agyei Aryee Bernard, Entrepreneur and Author of The 7 Cardinal Mistakes of Startups;
5. Putting initial capital in fixed assets.
“One major startup mistake first time entrepreneurs make is putting majority of all of your initial capital into fixed assets and eventually lacking liquidity to operate! There is the need to balance your little capital and do first things first! Growth as a startup is gradual! Being a contingent planner, I mean you should be flexible in your plans. They should not be fixed in execution since you don’t have much resources to meet changes that may come from the legal, political and social environment. That is the one step at a time management technique for startups. A child doesn’t learn walking by running. He crawls first.”
6. Excessively profit focused.
“Another important mindset that kills most startups is concentrating on profits not the passion. If you want to grow as a startup, there is the need to fundamentally shift your concentration to the passion for starting the business rather than profits. Some businesses don’t start realizing profits in their first years. Coca-Cola sold only 25 bottles in their first year of operations but they never gave up, now look at them. Focus on the passion not the profits as a startup and you will be one step ahead! My latest company that I am building hasn’t cleared all of its startup investments and we are almost one year old, but we are happy because we are led by the passion, not profits. It makes a lot of difference!”
7. Failing to handle the relationship of business and friendship properly.
“While friends can be of a great resource to start a business, they can also be the reason for failure. It’s great to start a business with friends, but know this; never bring your familiarity with that friend into the business. Separate the friendship entirely from the business. When you get to the office or the period of transacting business, it must be strictly business. Others fail because they normally don’t have the emotional and mental toughness to differentiate values of friendship from that of the business. During business hours everyone must be professional.”
8. Believing publicity, advertising & marketing are the same.
“When starting a business, you need to know that as a business leader, there is so much difference between publicity, advertising and marketing. The term marketing can be a little tricky. Know that marketing is a process and it involves a lot of sub units. If you can’t afford a separate marketing team. Then I advice you take your time and build some sales and marketing techniques. Don’t compromise on this because it holds the lifeline of your business. A wrong product with the right marketing will make a lot sales but a good product with the wrong marketing will make so little and insignificant sales. Be mindful and know the difference between publicity, advertising and marketing as a whole.”
9. First time entrepreneurs fear rejection.
“The most important skill first time entrepreneurs must learn to master is the art of selling in order to establish a successful business. So in our quest to developing this skill, we would face rejection. Rejection means that the potential customer does not see how your idea, product or service can solve his business needs or add value to it at the particular time. Rejection means the individual is not convinced about your product not your personality. Moreover, it is your idea, product or service, that your individual is buying not you. So never take rejection personal!” – Kofi Acheampong, Entrepreneur.
10. The mistake of trying to make everyone see your vision.
Patrick Edem Agama, Founder of Fortune Haven Group, helps us understand;
“One mistake to avoid is trying to make everyone see what you see, ‘The vision’. Not everyone in your team can see what you see. Sometimes, it’s good to have your team see and believe the dream but some people just won’t get it. Some of my friends will tell you, get rid of such people but I’ll say, just get them to believe in your dream if you can, but don’t waste all your time trying to help them get it because no matter what you do, some people just won’t get it. Let them do what they can do whiles you remain focused on the vision.”
11. Failing to identify the right market.
Henrietta Adjetey of BrandE explains;
I think there’s a major mistake first time entrepreneurs make; they refuse to define their market or ‘audience’. I personally thank God I realised this early in business. Your product/service is not meant for everyone, hence, the need to define your market. For example, Ghana Home Loans will not mount a billboard in Tsorkor (A slum in Accra) and share flyers to its residents, neither will an insurance company like Enterprise Insurance sell its services to a group of primary kids who still take their ‘pocket money’ from their parents. A lot of startups end up tirelessly try selling their ideas to the wrong people, frustrating themselves and their businesses. Remedy: immediately you develop an idea, identify your market and develop strategies to ‘get’ them.
Is your own mistake you have previously made not not stated, you are free to add them in the comment section.
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