Here are six top mistakes new entrepreneurs often make, along with tips on what you should do instead.
1. Blundering Into IP Disputes
Intellectual property is just like any other kind of property. It can be misappropriated, stolen and used without authorization. But even innocent uses of someone else’s IP, such as their photographs, artwork, and more, can wind up costing you thousands.
Instead, do this: Even if you purchase from a supposedly reputable business and assume they hold the copyright, you can be liable if it turns out they didn’t. Try running a Google image search and ask image vendors outright whether they hold the copyright. Finally, if it’s an important piece of your branding or marketing, inquire about negotiating an indemnification agreement. That way, if the image or artwork is someone else’s IP, the vendor is on the hook for paying your costs.
2. Overestimating Your Own Capabilities
Entrepreneurs tend to have a wide range of skills and knowledge. They also tend to be the type to think, “Hey, I could probably do that…” Perhaps four times out of five, they’re right to some degree. But when you’re in the process of launching your own business, you need to adopt this mantra and stick to it like glue: You cannot do everything, nor should you. Your time and energy must be devoted to the tasks that only you should be doing, as the business owner.
Instead, do this: Conduct a full, honest inventory of your strengths and weaknesses, and investigate ways to outsource those tasks that aren’t in your wheelhouse. Remember that time is often quite literally money. Saving cash now with an overly eager DIY approach might come back to haunt you later when you have to hire someone to fix your mistakes.
3. Missing Your Moment
Entrepreneurs as a group tend towards perfectionism. We’re not satisfied with a “good enough” course of action. We want the best possible solution. However, perfectionism is a business killer. Wait too long, and you may well miss your moment.
Call it “analysis paralysis.” It’s an immobilizing fear of making the wrong decisions. Of course, it’s important to carefully consider all sides of an issue and all your various options when faced with a decision. However, don’t let this become an endless game of “what if?” At some point, you’ll need to make a choice and live with it.
Instead, do this: Do your due diligence, by all means. Set a time period for researching and considering the pros and cons of various choices—say, a week, or two days. Then resolve to settle on an option and get on with business.
4. Cutting the Wrong Costs
Here’s a one-question quiz: What part of the budget should an entrepreneur cut first when sales slow down due to an economic downturn or other external event? If you said “marketing,” or almost any other arbitrary expense, watch out: this may be a mistake.
Cutting costs unwisely can also mean thinking a generic form contract you print off the internet is good enough for a new and crucial partnership. No matter how much money it might save you in the short run, you can wind up paying a whole lot more in the long run.
Experienced small business attorneys are a necessary expense, for example, especially for first-time business owners. And while your cousin with one semester of computer classes might be able to create your company’s website, it’s probably wiser to shop around and hire a professional.
Instead, do this: Keep in mind that temporary cash flow problems are most likely just that — temporary. Look carefully at your numbers and think about various scenarios before you cut costs indiscriminately. Don’t let fear get the better of you.
5. Forgetting About the Rest of Your Life
I see this one the most often among entrepreneurs I know or interview. It’s tempting to slam energy drinks and cram down granola bars during jam-packed days of getting your company up and running. Resist the urge, if you want to see your business succeed. Launching a business takes long hours and a lot of hard work. Just don’t neglect family and close relationships, or your own mental and physical health.
Instead, do this: Carve out time for breaks throughout your day. Make sure you get enough sleep, exercise and proper nutrition to see you through long days. Your body and your mind both need proper rest and high-quality “fuel” to power through this crunch time.
6. Striving to Be All Things to All People
If you find yourself thinking “Everyone will want my product!” or “My target audience is everyone over the age of 21,” take a deep breath and pause for a moment. It’s scary in the beginning, when cash isn’t flowing the way you want and need it to flow. However, the answer to that challenge isn’t broadening the target of your product or service. Rather, it’s narrowing it to the niche that’s tailored to your product’s specific strengths.
Instead, do this: Drill down on your ideal customers for your lead products and services. Then focus with precision on those ideal customers. Get to know them with as much detail as possible, then communicate with them in their language about why your company is their best solution.