I have recently came across an article about this topic that I think you should take a look https://www.comidor.com/en/blog/cloud-technology/10-do%E2%80%99s-and-don%E2%80%99ts-for-startups
Mistakes are obvious when you are starting something of your own, but the important part is that whether you are learning from them or not. Some of the most common mistakes made are:
1. Estimation of Time and Money.
2. Target Market estimation.
3. Lack of Patience as they want to make good money very quickly.
4. Discouraged when the cash flow goes in negative during the start of the venture and most of the start-ups shut down during that phase.
5. Lack of understanding that it takes time for anything to grow, their might be scenarios and examples where Business has grown in a month but that's one in a thousand cases.
6. Not giving a lot of time to "Go-To-Market Strategy".
In a word... INCOMPETENCE...
Many common mistakes;
• no clear purpose
• starting without a vision
• starting without a plan
• not enough capital
• failing to focus on revenue generating activity
• not knowing their target market
• not knowing their ideal client
• too afraid to fire a client
• forgetting about life time value of a client
• buying from the wrong vendors
• not looking at the relevant numbers (especial the financials)
• Cost of goods over runs
• carrying too much inventory
• not having enough inventory
• poor activity management
• selling to the wrong customer
• poor customer service
• hiring the wrong staff
• hiring too fast
• firing too slow
• poor leadership
• crap sales skills
• scaling too quickly
• and the list goes on and on and on and on and on...
so like I said... in a word, INCOMPETENCE... they don't know what they don't know and for some reason they're not asking for help from the right people.
Being overly optimistic about the product/ service and anticipated demand.
Waiting too long for something to happen without any change to the original or initial strategies
"The Five Stages of Business Growth and Development" (Churchhill and Lewis. Harvard Business Review) provides a great overview of the problems and challenges that entrepreneurs face as they move along the continuum from startup through maturity.
Doing for what can be done for you. No need to reinvent the steering wheel. Business services can be expensive. Many first time entrepreneurs try to do everything themselves when they should be focusing on how to establish themselves as an expert in their field.
Underestimating all the unfamiliar hats you will wear and, for some, giving up too soon. Perhaps bigger than those, not having a reason beyond yourself for doing what you do. Allowing you life to get out of balance; don't lose sight of what is most important to you. Forgetting we all make mistakes; they are our best teachers.
The biggest mistake that I have seen, unfortunately in more than one company, is that the first time entrepreneur gets emotionally involved in "their baby", to the extent that they no longer make rational decisions.
There is a major difference between having the desire and the enthusiasm to drive your project and being blinded by being too involved.
Many would say that this inability to focus on the really important aspects negate you from actually being an entrepreneur by definition.
I find this closely related to the people I meet who think they have "made it" because they are the CEO of a company of 1 (themselves).
The one truism is to be an entrepreneur check your ego and your feelings at the door.
Lack of a good marketing plan.
Underestimating investment needed
Depending on size of a start up, not hiring qualified talent required for the organization
They underestimate the importance of understanding their target market - both customers and competitors. It usually results in overestimating sales for the first few months what puts pressure on cash flow and ends up in not paying creditors which could lead to disaster.
It is good to work for a competitor some time before starting own business. It will reduce the risk.
I think that one of the bigger and most common mistakes is that you fall so head over heels in love with your enterprise that you are no longer connected to the world around you. After all, in order to be successful you need to solve a problem. If your infatuation with your own startup/product/idea etc. is not solidly anchored in the surrounding community then you soon might find yourself all alone without any customers.
There are lots of great answers to this question. I agree with Cate Costa, however I see strategic planning as the number 1 mistake made by first time entrepreneurs. A plan is necessary to see the vision, the end result, and the big picture. Breaking down the end state into smaller, achievable results with reasonable timelines allows the entrepreneur to work towards goals and see progress.
Too many times entrepreneurs jump in without a plan, or a well thought out plan and end up failing. Or they get overwhelmed and can't complete smaller steps to equal bigger steps.
Also definitely agree with Peter Harley's comments as well. Good discussion!
Not enough capital and overly optimistic view of the market (although you don't want to lose that, as it serves you well).
Not enough capital, no business plan, renting office space, spending money they don't have on things they don't need and leaving their day job before they are ready. These are a few that come to mind.
The number one mistake is not conducting an assessment to determine if their business is feasible.
While working as a small business counselor for the Maryland Small Business Development Center (SBDC), many of my clients didn't seek our assistance until after many mistakes were made.
Visit www.asbdc-us.org to find an office near you.
One of the biggest mistakes I've watched over and over again is confusing cashflow with profit. Beginninng entrepreurs fail to realize that the two are different and collecting and cashing out the profit can be a very diffiuclt thing. Fast growing companies need lots of cash to fuel their growth. When an entrepreneur takes too much cash out too soon, very bad things happen. The answer to this is to make sure that along with a Profit and Loss Statetment and Balance Sheet, a Funds Statement ( also known as Sources and Uses Statement) is delivered and discusssed every month.
Typically first time entrepreneurs make the following types of mistakes;
1. A lack of market research to validate their proposition.
2. Under estimating the cash requirements needed to launch their business.
3. Too broad a focus for their concept.
4. Not preparing a proper, vision statement, mission statement and purpose.
5. Writing a business plan that is not executable and not Investor worthy.
^. Not getting supply chain and product resources organized and committed.
The most common mistakes:
It all starts with being honest with yourself, brutally honest (see Good to Great)
and becoming an effective executive (see The Effective Executive)
See -- means to read carefully, take notes thoughtfully, and take immediate action.
1) Not documenting and proving, clearly, the target customer's pain / complaint
2) Not taking action to get #1 done because they fear being wrong (everyone wrong when they first start out) WRONG paves the way to being RIGHT
3) Not creating a quick, simple prototype and testing with real people, fear of being wrong
4) Fearing failing instead of failing
5) Not brushing themselves off and getting up to try again
6) Not have an an effective personal coach (see Michael Jordan, Steve Jobs, and many more)
7) Not creating a business model, on paper
8) Not taking action and editing the business model as they go
All of this stuff it the setup for you to get the right things done every day, week, month, quarter, and year.
Everything falls into place as you do the right things. Document, adjust, and edit.
Becoming an effective leader is the most important goal to having a successful and prosperous business.
If its on paper you can't lie to yourself or anyone else!!!
Brilliant insights only become effective /successful when combined with systematic hard work.
Prove your right by being wrong until your right, by building a profitable business that your customers rave about by giving you their money, their trust, and their friends as customers.
A thorough due diligence of any business endeavor is needed. This includes self assessment. Cate has made good points. I will add to that that - Perseverance. If something can go wrong, it will - - most entrepreneurs give up when they are close to success but not there yet.