Young entrepreneurs are the future of a country’s progress. However, they are also more suspectable of making mistakes that can cost them a business loss or shut down. If you are also an emerging entrepreneur with a compelling business idea, it is natural to worry about making mistakes.
But your worries are gone, as I’m here to stop you from making the common ones. Below, I’ve compiled a comprehensive list of the top 9 mistakes young entrepreneurs make and provided solutions for each one. So, read along and learn how to avoid things that result in others’ loss.
Mistake #1: Starting Without a Plan
What’s exciting for young entrepreneurs is the idea of their business model. They hear success stories of various people, watch motivational videos, or just hit upon a solution that overwhelms their joy. Indeed, the concept of starting a business and being your own will feel sensational for you as well. However, a thorough roadmap is always crucial.
Several people jump into the business without planning about the bills, workspace, clients, employees, investors, or regulations. According to Startup Genome, 90% of startups failed in 2020 (during the pandemic) and mostly collapsed due to improper or lack of planning.
They don’t do their homework, which eventually results in the business collapse. If you are starting a business for the first time, consider talking to an expert. Analyze cash flow and management from different angles, and more importantly, research your market. I’ll get into this in a while.
Mistake #2: Starting Too Early
But even if people research their market before a startup, they sometimes go live too early. Often, they misunderstand the homework and mistake it is the right time to begin. Incomplete research is even worse than no research since they don’t realize they are short on information and keep continuing. As a result, they suffer a huge waste of time and money.
Make sure you have complete homework on your market so you don’t miss out on any essential detail. Analyze your startup or business idea from various aspects, and check if it addresses most problems. You can compare the points with your competitors to get a clearer picture.
Mistake #3: Waiting Too Much
But sometimes, young entrepreneurs get too indulged in perfecting their product or service, delaying the launch a lot. Starting with a proper plan is one thing while chasing perfection is something else that damages the business.
You can wait for the right time to launch, but as a young entrepreneur, it is better to avoid any delay if you think the business structure is ready. The waiting method depends on the business’s industry and suits the professionals.
Moreover, you may lose valuable clients, customers, and sales while fixing every error or flaw. Of course, resolving the major issues is essential, but you can launch the business if you don’t find any mistake in plain sight.
Mistake #4: Expanding Business to Wrong Audience
Another mistake young entrepreneurs make is selling to the wrong audience and expanding unnecessarily. The former situation results in poor market research and in unplanned startups. This incorrect selection can be in the form of different launching regions, people, or industries. But several entrepreneurs are somewhat familiar with the consequences, so they initially take care of it.
The problem arises when the business start blooming and the entrepreneurs try to expand the business. I’ve seen many people where success overwhelms them. They think this person or industry will also love their services. As a result, they start losing market value. If your business progresses in the early stages, stick to the market you are selling. Grab more attention in the same sector and avoid distractions for a few years.
Mistake #5: Hiring Inappropriate Employee
Running a business is not a one-person job (besides some particular small-scale ones). To address different aspects, you must hire new people. But at this stage, many young entrepreneurs hire the first person they interview without diving deep into their skills and capabilities. Eventually, it results in too slow progress or the company’s collapse.
To hire the right candidates, you should interview and analyze several applicants and select the one after comparing. If you are not an expert for the hiring position, ask a field expert for assistance. Another option is to temporarily work with a recruitment agency, and later make an HR department in your company.
Although several small-scale businesses don’t require employees, they need them once the business starts blooming. Check out such one-person and multiple-employee best business ideas list from our another expert to pick the startup that excites you.
Mistake #6: Underestimating Products
Offering affordable prices is good, but under-valuing your product for the sake of competition is not good for business. Several young entrepreneurs don’t value their service or product and make a pricing plan that delivers nothing but loss. Yes, you should be competitive with your competitors, but several other factors also play a vital role.
For instance, Quality. If you are confident your product offers the best quality in the market, you should charge accordingly. When users are satisfied with the quality, they will return (and may refer to others, giving free marketing). Another aspect is net price and profit. Analyze manufacturing costs, salaries, bills, profits, and all the financial sectors while setting the price.
Mistake #7: Too Much Automation
In this modern era, companies evolving with technology and automating processes have a high chance of prospering. However, young entrepreneurs take this inspiration too seriously and rely too much on automation. Indeed, it streamlines processes and adds a cost-cutting value. But some areas demand an expert’s work and skills.
You need to create an effective blend of automation and manpower. Utilize tools and software for routine tasks and common operations. And hire the right candidates for projects, services (that engage with clients and customers), and specific work.
Relying extra on automation can also be expensive. Initially, when young entrepreneurs have a large capital, they subscribe to the best deals. Purchasing expensive packages brings financial instability, which problems them in the long run. If you want to avoid startup mistakes like this, read our other blog with solutions and lower your failure chances.
Mistake #8: Disorganization
Many young entrepreneurs dream about a successful beginning. However, when they get enough sales, multiple tasks add up, increasing the workload. It often results in disorganization, where the entrepreneurs fail to manage properly. Many of them are mistaken that they will handle the load themselves, disturbing the work-life balance even more.
By the way, you can read more about this work-life balance and other entrepreneur challenges in our dedicated guide. Anyways, the key to running a successful business is proper management. You can organize your team, projects, customers, and sales via project management tools and to-do list planners.
No, I’m not contradicting our thoughts regarding the previous mistake. There, I talked about automation, but here, I’m talking about using technology to streamline workflow. So, there is no shame in investing in project management software.
Mistake #9: No Contracts
Last but not least, almost all young entrepreneurs start their businesses on a small scale. At this stage, they expand their business through friends and family members, plus using references or personal connections. This is where they make mistake for the sake of courtesy (or trust, I say).
They usually make deals and confirm projects by word of mouth. Remember, no matter how strong your relationship is with the other party or business partner, make written contracts and complete the proper paperwork. Get written forms and letters from them, even if the other person is your sibling. It will not only bring professionalism and transparency to your business but also help you track contracts in the future.
Conclusion
Starting a business is always filled with many ups and downs, especially for young people and beginners. It’s the mistakes and right decision-making that determine whether a business will experience more ups or downs. And in the case of young entrepreneurs, the answer is mostly downs due to mistakes.
However, I’ve gathered the top mistakes a new entrepreneur makes and also provided solutions. If you are also a beginner and young enthusiast, I hope this blog has cleared most of your thoughts and confusion. Although mistakes are inevitable, you can now (at least) avoid the common ones and start your business on a delightful note.