In this essay, business education writer Juliana Davies explores many of the common mistakes entrepreneurs make when getting their startups off the ground–and how these pitfalls can be avoided. Small World Group has written about various aspects of a successful business model before, and Davies’ insights contribute to this conversation. More of her work can be found on http://www.mbaonline.com, a website dedicated to business scholars, prospective students, and recent graduates.
Small World Group’s Blog welcomes other authors to contribute to our discussion.
The current economic climate has spelled doom and gloom for nearly all industry sectors, with one notable exception—small businesses and start-up ventures. Barriers to entry are lower today than they have been in decades, which is likely part of it. The flexibility entrepreneurs have to nimbly work around problems, roll with the market’s punches, and innovate new strategies is also key. Many economic scholars have recommended that, if the country is serious about economic recovery, more federal dollars should be allocated to small business training and stimulation. Financial incentives and tax breaks can go a long way when it comes to helping a business get off the ground. In order for a venture to remain successful, though, its leaders must be strategic—they must avoid common pitfalls and be efficient and adaptable enough to pull through rough times.
One of the first mistakes many entrepreneurs make is failing to follow a coherent plan. Having an idea or basic concept is usually enough to get a company off the ground—but going further usually requires concrete direction. This most often comes in the form of a written business plan, but any hard and fast goals or vision statements can serve a similar purpose.
At the same time, though, entrepreneurs cannot be so married to their initial vision that they end up unable to adjust to a changing market or clientele shifts. “Just as lack of planning can be a problem, adhering blindly to your plan is a surefire way to steer your company off a cliff,” British business magnate Richard Branson said in an Entrepreneur magazine article exploring common startup mistakes. “A successful entrepreneur will constantly adjust course without losing sight of the final destination.”
Fixating on competition is another early misstep. “Much better than fighting for scraps in existing markets is to create and own new ones. Sometimes you have to fight. When you do, you should win. But conflict tends to be romanticized, and people tend to get sucked in,” Forbes said in a 2012 article outlining tips for new start-ups. “It is worthwhile to think about how to run away from the fighting and build a monopoly business instead,” the article said.
Setting the right foundations is essential for success. Once off the ground, though, entrepreneurs often struggle with keeping processes efficient, and staying the course without distraction. Following best practices for start-up efficiency are often just as important as avoiding early mistakes. Expert recommendations typically include the following:
Appropriate leveraging of technology. Many young entrepreneurs treat e-mail, tweets, and instant messages as something of a given, but creating a plan or policy for how messages will be answered and when can save a lot of stress later on down the line.
Participate in social networks and online communities. This is obvious for most web-based businesses, but is something that other companies can have a tendency to undervalue. Web interactions drive traffic both on or offline, and many consumers expect at least an informative website.
Commit to an in-person networking plan. Just as eschewing the online space can spell trouble, so can relying on it exclusively. Many small businesses grow through word of mouth and personal connections. Reaching out to industry leaders, attending conferences, or speaking on panels can all come within this category if pursued for purposes of making new connections and forging professional relationships.
Many scholars believe that a resurgence of small business strength is a country’s best path towards any economic turnaround. Over the last few years, start-ups have created more jobs than big industry in nearly every sector. Investing in entrepreneurships will doubtless help spur innovation, but cannot alone fix the situation—long-term stabilization is in the hands of owners and executive officers who must manage what they have and turn it into something with long-term sustainability.
— Juliana Davies