From the side, entrepreneurial activity can seem easy and incredibly profitable. Business is like a ticket to the world of successful and wealthy people who are only building up their capital, having no idea about financial problems. Of course, in practice this is not at all true. Successful companies that have reached certain heights in their niche are just the tip of the iceberg, behind which is an entire army of ruined entrepreneurs.
As studies show, the vast majority of people who decide to start their journey in business already close their projects in the first year, often remaining in debt. And the matter is not only in adverse market conditions or in the non-viability of enterprises in principle. Most newcomers make the same mistakes, due to their inexperience and lack of knowledge in the field of management. The most common errors of this type will be discussed below.
1. Excessive belief in success
Business is a rather aggressive environment in which not idealists but pragmatists survive. Many newcomers believe that their idea can bring great benefits to society, so everyone around them will be happy to contribute to its promotion. But even truly valuable startups have to deal with enormous difficulties and obstacles that will to a large extent arise in the context of fierce competition. Therefore, it is much more important not to harbor abstract hopes for the implementation of the idea, but to develop clear practical mechanisms for promoting the project.
2. Fear of failure
Failures in business plagued many prominent executives, but each of them knew how to draw conclusions and move forward with new experience. Fear of mistakes is just as dangerous as an excessive belief in success. These are two extremes that do not allow you to make informed decisions.
3. Listen to others more than yourself
What is one of the secrets of successful entrepreneurs? The fact that they led their companies to high results, relying on their vision, businessman’s instinct and strategic thinking. A unique view and understanding of business processes allowed them to move the enterprise in a special direction, building their own path to success.
Does this mean that a newcomer to a business should rely only on himself and, in principle, reject all advice? Not at all, but he needs to have his own solid understanding of the principles, tactics and strategies of moving forward, and recommendations from the outside should be considered in terms of opportunities to improve the intended course.
4. Ignore the principles of discipline
One of the keys to successful business activity is compliance with the rules of work ethics. Discipline should be supported by the whole team, and especially by its leader. The mistake of many entrepreneurs lies in the fact that, having successfully overcome the period of formation and organization of the work of their enterprise, they begin to move away from their duties. They lose the grip of managers and shift the main functions of leadership to managers, and they themselves devote more and more time to leisure and personal life, reaping the first fruits of those very incomes.
5. Lack of goals and mission
Without a vision and understanding of the role of his company in public life from the point of view of the consumer market, the businessman also risks being among the losers.He does not know and does not feel what place his products or services occupy in the life of the target audience, and therefore he cannot plan the future of his company, fixing trends and making decisions more appropriate to reality.
6. Waiting for business revenue
One of the biggest strategic mistakes in managing a company in the early stages is when an entrepreneur eagerly begins to wait for a financial return on his business. Moreover, large revenues may well take place at an early stage. This is precisely the catch. An inexperienced businessman relaxes and comes to the understanding that his career was a success - then only replenishment of the wallet follows.
In fact, in the first few years it is especially important to invest all the revenues in the development of the enterprise, otherwise it will not be able to survive in the competition. Rates increase as the business expands, and the manager, who does not contribute to this process, risks in the near future being left with nothing.
7. Ignoring team interests
The team is no less valuable resource in the life of the company than the role of the leader himself. Many managers consider their team purely in a technical vein as a mechanism that performs the tasks assigned to it. But this is not quite the right approach, since the human factor in business is of great importance. The level of motivation, psychological comfort, the culture of relationships - all this affects the productivity of employees. A leader who takes into account the interests of subordinates and listens to their gutters or even harsh criticism will always have a better chance of success.
8. Ineffective cost control
We have already talked about the need for regular investments in the company for the benefit of its development and expansion. But the costs must be carefully verified. Often the cause of financial collapse is not direct investment in production, but indirect spending. Each article individually may require small amounts. But the fact of the matter is that a developing business is provided by dozens of such articles, which should be calculated monthly.
9. Underestimation of competitors
If an entrepreneur focuses only on the advantages of his project, not understanding the market situation among competitors, this increases the risk of failure. It is important to know what offers and advantages other players in the target niche are making.
10. Lack of knowledge about the target audience
Again we are talking about the lack of a broad view of the scope of their activities. The product as such may be arbitrarily good in the eyes of the manufacturer itself, but if the consumer is not interested in it, then there will simply be no sense in the presence on the market. Therefore, it is necessary to conduct a comprehensive study of the target audience and determine which products and services it is interested in before launching the enterprise.