The thought of working for yourself and starting something new can be thrilling and incredibly exciting. Your enthusiasm is high and all you can think of right now is how to dive deep and get this business moving until you hit a snag you didn’t see coming.
We put down our ideas and put a few documents in place, but we can’t explain what went wrong with our theories and plans. It goes to show that running a business often requires much more than a bunch of ideas put together.
Certain factors determine whether our businesses will do well or not. However, it’s quite unfortunate that we sometimes ignore these things because we’re just so anxious to start our own business.
In this blog post, we’ll be sharing with you 10 things you should not do when starting a business.
Quit wasting too much time on a business plan
In a bid to make our business as perfect as possible, we sometimes end up wasting a great deal of time writing a business plan.
Do not get this all wrong, though. It is absolutely important to have a structure for your idea when starting your company and to also make your vision presentable and tangible. However, do not dedicate your entire time trying to prepare the perfect business plan when you can start growing the business already.
Alain Hanover, a Bentley professor, veteran entrepreneur, and investor advised that you shouldn’t waste months and months honing your business plan as it is a huge waste of your time and resources since you will likely toss it out or rework it completely after your first business meeting.
Instead, he suggests using a simple 10-page slide deck that covers all the important bases, including your: Market, Team, Advisors, Competition, Existing problem, Solution to the problem, Product or brand development strategy, Projected traction, Early financials, and Needs.
Do not skip market research
Do not start a business without doing research on the viability of the idea or gauging the market. Failure to do thorough market research will cause the business to collapse eventually because the business idea may not be a viable one after all.
Though market research is sometimes not dependable because people may not know what they want, market research plus your insight and gut can do some miracles.
Do not be scared to fail
Failure shouldn’t always mean negativity, as you can choose to see it as a teacher. It isn’t just the things that go right that can teach us lessons.
While it is important to minimize the possibilities or chances of failing, be open to learning from your mistakes. Do not be rigid with your plans and strategies. Implement whatever you have learned and move on.
Do not hire family and friends in place of qualified employees
It can be an advantage to bring people that you know on board, but only if they have the needed skills to skyrocket your business.
Hanover says, “The people that you choose to hire and bring into your organization are the lifeblood of everything, from selling your product to delivering your service to creating the actual culture. Every person that you hire is important, especially in critical stages for your company.”
So, rather than cut costs by trying to get family and friends who are likely going to work for you for free, go for qualified talents that will do a good job.
Do not try to do it all alone
It’s tempting to want to do everything alone so that no one share in your company’s success when the time comes, but you cannot always do it all by yourself.
You can talk to people about what you are doing so you can get ideas about what is wrong and right with you. You can also get people to intern with you or partner with you, in some cases.
Do not go about asking everyone you know for capital
Well, for small projects that involve asking family and friends for funds, asking around might not be a bad idea. For bigger projects, however, you might want to reconsider.
Hanover explains it this way, “You don’t want to muddy your investor group if you don’t have to. Some venture capitalists want to be the first ones in the door, and shopping your opportunity around may make you used goods. Once you shop the deal, word gets out. The investment community is very small.”
You could hurt your chances by going to the wrong investors or too many of them.
Do not start a product business
Product development requires time and a lot of money to start. This means that if it does not go well, you may end up losing everything you invested.
You can start a service company to increase your chances of steady cash flow. Once you have this cash flow, you can then invest money in a product company, as it is easier to scale it up than a service company.
Do not ignore the economics of the business
Most entrepreneurs focus on certain business metrics like sales, company size, and the like, leaving out what’s important; profit.
At the end of the day, volume without profit means loss. Which is why most businesses end up failing. It is paramount for an entrepreneur to understand how to make money while balancing all other terms.
Do not ignore the necessary paperwork
Ellen Fitzgerald, founder of Boston’s Mother Juice food truck says, “When you’re starting a company, you’re working with a friend, and you just have an idea. It seems crazy to go to a lawyer and ask them to put that in writing for you, but those documents are so important should anything happen with your partnership.”
Take the documentation of your ownership stake and your partnerships seriously and don’t overlook the importance of creating your legal framework from the beginning.
Do not forget to pay yourself
I know as entrepreneurs, we all have the tendency to put every dime we have into our businesses and not bother about our personal needs, but paying yourself is important for the success of your business.
Fitzgerald advises that “Founder salaries need to be a part of your business plan. A lot of small businesses- and I know I thought the same way- don’t want to take money out the business because your business is yours. It’s not a real business if you can’t afford to pay yourself. It doesn’t look good in the eyes of the investors to opt out of paying yourself, even in the beginning.”
So, like you will get paid working for others, get paid working for yourself as well.