12 Common First-Time Business Owner Mistakes and How To Avoid Them
Becoming a business owner for the first time is an exciting and sometimes daunting endeavour.
It takes hard work and patience to successfully operate a business, and knowing where to focus your energy can seem overwhelming at times.
As you take on this new opportunity in your career, seek the advice and guidance of those who have been in your shoes. You’re not alone in this journey; many business entrepreneurs come before you!
Twelve business experts share their guidance for first-time business owners. Read on to learn about the common mistakes of first-time business owners and how you can avoid them in your business.
#1 – Not Building a Business Plan
Starting your new business is exciting, so it can be tempting to rush the planning stage. However, the business plan is an important first step for any new business owner, and it’s worth taking the time to develop a well-researched plan before you get started.
“A business plan is the blueprint for a new business. It is a crucial stage of research and development,” explains Justin Rapoport, Co-Founder of TruHeight.
Avoid the mistake of rushing into your business without a plan by taking the time to research and strategize your business plan first.
#2 – Registering Incorrectly
In the hustle and bustle of the early stages of business development, new business owners can forget to dot their Is and cross their Ts. Rushing straight into preparations without registering your business correctly can be a huge mistake for your new business.
“The early-on registration and paperwork process can seem daunting, but it’s worth slowing down and doing it correctly the first time,” says Max Schwartzapfel, CMO of Schwartzapfel Lawyers. “Correctly registering and insuring your business will save you a lot of stress and trouble later on.”
Make sure to meet with a legal representative and register as a business entity. Double-check that you are registered for the business type that most aligns with your offerings so you can easily scale in the future.
#3 – Not Defining Your Target Audience
The target audience of your business is the group of people who can most benefit from your products or services. Defining your target audience can help you develop a business strategy based on the needs and behaviours of those most likely to engage in what you’re offering.
“Spending time to delve into who your target audience is can be a defining step in building your business strategy,” states Justin Soleimani, Co-Founder of Tumble “You have to understand the needs and behaviours of your audience to market to them efficiently.”
Take the time to gather consumer data, understand your niche, and build profiles for the audience you hope to engage with.
#4 – Not Creating a Marketing Strategy
Without a marketing strategy, the quality of products or services your business offers doesn’t matter. People need to know about your business to engage with it, so creating a marketing strategy is necessary for success.
“It is imperative to invest in your marketing program because it can have an enormous impact on your ability to scale,” explains Gily Netzer, CMO of Perimeter 81, “Having a plan that targets a specific audience, personalizes your brand and capitalizes on a digital presence can put your business on the fast track to growth.”
Create a targeted and active marketing strategy to best engage with potential consumers. This will allow your business to grow and bring in new clients over time.
#5 – Overspending or Underspending
The initial spending while starting a business can be a careful balancing game. Underspending can lead to poor quality or an incomplete start for your business, but overspending can put you in a hole that is impossible to get out of.
“Be careful with your initial business budget,” warns Asker A Ahmed, Director of iProcess Global Research. “Your initial investments should be proportional to how quickly you can get sales out the door. Make a conservative estimate of early profits.”
Work closely with financial advisors to create an investment plan that makes the most sense for your business.
#6 – Moving Too Quickly
In the excitement of starting a new business, it’s not uncommon for business owners to rush the process. Especially after an initial investment in the business, getting sales out the door as quickly as possible is tempting. Yet, moving with patience and intention in the early stages of your business is much more likely to set you up for long-term success.
“Patience is key in the early stages of business,” explains Maggie Brown, Founder and CEO of Recess Pickleball. “Of course, everyone wants to be at the profit-making, productive stage of their business plan. But success comes from a well-thought-out strategy and careful game plan.”
Before setting launch deadlines for your new business, factor in time for a thorough preparation stage that includes research, strategy building, and storefront prep.
#7 – Undervaluing Your Product or Service
As a new business owner, you may feel you need to undersell yourself to get initial buy-in. However, undervaluing your product or service can be detrimental to the long-term growth of your business.
“Just because you’re new on the market doesn’t mean you don’t bring value to it,” says Oliver Zak, CEO and Co-Founder of Mad Rabbit who offers high-quality tattoo numbing cream. “You’re bringing enormous value by bringing in a fresh perspective and new idea. Pricing should reflect the effort you put in and the value the consumer gets.”
When you undervalue your new business, you are telling the market to value you at the same level. Meanwhile, you’ll be waiting a lot longer to break even from those initial business investments. Set your prices at a level that accurately reflects your time and materials and bring in customers who see your value.
#8 – Failing To Protect Intellectual Property
Intellectual property is any intellectual creation, such as a product idea, design, or written work, that you have made. You can protect your intellectual property by applying for a patent, copyright, or trademark.
“A common mistake for new businesses is not protecting their intellectual property,” explains Kevin Miller, Founder of kevinmiller.com. “It may not seem like a big deal in the early days, but once your business takes off, you’ll be grateful for the protection.”
Protect your business’s intellectual property to avoid copy-cats and scammers. Registering your ideas makes them legally your own, and you can move forward with your business with more ease of mind.
#9 – Skipping Written, Formal Contracts
In the early days of a business, a handshake or a verbal agreement can seem adequate for small-scale business transactions. However, without a written, formal contract, your business is left unprotected if your partner backs out or messes up.
“A written contract can only ever be beneficial to you as a new business,” states Micaela Beltran, CEO and Co-Founder of Courtly. “Make sure to get those early agreements on paper so you don’t end up in a situation you can’t recover from.”
Get all your business agreements in writing to best protect your new business in its early stages.
#10 – Doing It Alone
Running a business is not a one-person job. It requires a team of hardworking individuals and a strong network of support. Don’t try to run your new business completely on your own.
“Running a business is hard work; doing it alone is unnecessary and often impossible,” says Saad Alam, CEO and Co-Founder of Hone Health. “Building a strong support system of professionals and helpers for your business is integral for success.”
Even if you can’t hire others in the early stages of your business, build a support network by reaching out to business professionals who inspire you and other entrepreneurs.
#11 – Hiring Incorrectly
When it is time to hire team members for your new business, be careful with your selection. Reflect on your skills and weak points to build a strong, well-rounded team.
“Hiring for your small business should be a process of filling the gaps in your knowledge and expertise,” expressed Agatha Relota Luczo, Founder and Chief Creative Officer of Furtuna Skin. “No one can do it all, but you can strengthen your business with a diverse and skilled staff.”
Hire skilled professionals who have experience in the areas of business-building that you don’t. That way, you can work together to build a strong business strategy from diverse perspectives.
#12 – Failing To Learn
Failure is a part of any new endeavour in life. Small failures, mistakes, or miscommunications are natural, and they don’t have to negatively impact your business if you can learn from them and do better next time.
“The biggest thing I have learned is that you always have to keep trying,” says Charlie Tuzzi with Cameo by Copland Cleaners & Winzer Cleaners, “Success is not easy, so never give up on your dreams. Your failures are all learning experiences. Don’t waste them.”
When you fail, take the time to reflect and course-correct so you are stronger moving forward.
See Success in Your New Business
As you enter this new professional endeavour in your life, take the time to strategize and learn from other business owners’ mistakes. A new business is an exciting opportunity, and you can see huge success by taking your time, planning accordingly, and building a network of support.