Here’s an alarming fact for new entrepreneurs: Over 66 percent of all new businesses fail within their first eight years of operation. Thankfully, you as a new business owner can reduce your risk of failure by avoiding the following five common mistakes that many new entrepreneurs make.
1. They don’t make the best use of their time.
When your day is not planned out, you tend to react to others instead of creating or producing. For example, let’s assume you just opened an architecture firm and have a few projects going. To get paid, you need to produce drawings, models and keep engineers and contractors on schedule.
But, what if you didn’t have any set plans on any given day? That would mean you come into the office and react to each phone call you get. In other words, you would spend all day putting out fires and neglect putting any time into creating or producing the actual product you sell -- that being building plans.
This is a problem.
If this goes on long enough, you will get behind on your production schedule and eventually lose clients over your inability to focus on and complete your projects. Instead of reacting all day, plan to return emails or put out fires during a set amount of hours a day. Also, set aside a predetermined amount of hours to focus on production or similar jobs that lead to finished products.
When you do this, you will prevent the emergencies -- perceived or otherwise -- from hijacking your entire day of productivity.
2. They waste time on unimportant things.
A good rule of thumb to prevent yourself from making this mistake is to use the “so what?” test.
For example, your business has 2,000 new Facebook followers in just this past month. So what? What does that do for your business?
By evaluating issues like that you can weed out what is really profitable and what isn’t. Having Facebook followers is great and all, but if you don’t convert at least some of those followers into leads, what good does it do you?
3. They avoid confrontation at all cost.
You want to be liked as an entrepreneur. That makes sense. However, when you focus on being liked to the detriment of your business’s health, that becomes a problem.
When you are faced with bad employees who are not doing their work properly, bad deals that just aren’t advantageous for your bottom line or other similar scenarios, you have to step up and make the hard decisions.
Remember, it’s not personal, it’s just business.
4. They are too careful for fear of failure.
Failure is a big part of success, so if you as a business owner try to prevent failure so much that you cease growing your business, you are doomed to failure.
The following quote is from a cartoon movie, but it is worth remembering. In Kung Fu Panda, the master turtle Oogway says, “One often meets his destiny on the road he takes to avoid it.”
This is very true if you ponder on it for a bit. If you never take any chances with your business, you will never grow. If you don’t grow, you will eventually become stagnant and go backwards. Then, you will begin to fail. So, as you can see by being so afraid of failure that you don’t improve or grow, you doom yourself to fail after all.
5. They don’t have a realistic estimation of their operating costs.
Before opening a business, you should make sure you know how much revenue you need to keep afloat. This includes paying yourself.
Many new business owners forget that and only consider the cost of rent, employee salaries and utilities. This is a good start, but if you don’t include your own salary in that number, you will vastly underestimate how much money it will cost to successfully run your business.
Owning your own business can be hugely beneficial. Answering to yourself and doing what you love -- it’s what everyone wants. However, being an entrepreneur can be hard and challenging at times, but if you keep these five common mistakes in mind you'll be giving yourself a leg up.