I have read many blogs that talk about mistakes that entrepreneur makes while starting a new venture. I have felt that most of them talk about large entrepreneur whose companies have teams in multiple locations, with good capital resources available and teams to support them.
An ordinary entrepreneur who puts his own money on line is most of the time a small guy. He/She does not have massive resources to run his venture. Most of the people who dream big usually start small. Size, then is a big concern for all the entrepreneurs.
Large projects have large risks but smaller ones too have some risks. The risk of venture failing to take off, being grounded due to lack of money or right people is very high. Let us take a look at some of the mistakes that entrepreneur may make in his venture.
- Risk of not researching the market before starting the venture
- Lack of budget for advertising
- Not maintaining good cash flows
- Not building a team
- Believing there is no competition
When I started my first venture, I was full of optimism. I thought that since my product was great people would be tempted to buy it. I knew my target customers and I was confident that they are seriously inconvenienced with a problem and would love my product. However it turned out that there were no serious buyers. The people whom I thought would come to my ecommerce site and purchase things did not turn up in the numbers, I had expected. The inertia of buying online ( surprising ) was too much. It was a total misread of market .
Tip: Try to identify your target market as correctly as possible
If your business is new, you need a lot of advertising and not less. And advertisement does cost money. It is also a recurring cost that takes long time to get some revenue. Most of the time advertising budget is kept in smaller proportion to let us say employee salary or rent. In my case however ,it turned out to be 20% of overall monthly cost.
Tip: Keep a suitable budget for advertising too.
It is very important to keep the cash flow going. If you have a large pool of money, then you can withdraw from it to run your business.However, you will need sales to run your business.If the cash flow is not positive. your business will face difficulties in operation.
Tip: Always keep an eye on the cash flow .
Of course, you can hire employees to build up a team. But there is no substitute for dedicated team. People who work for cash can leave your business anytime, leaving you vulnerable to disruptions. It is important to find right people and motivate them to join you for say a share in company profits or anything else.
Tip: Build a team that will stay with you in tough times.
Most of the time, entrepreneurs believe that there is no competition in the market. In my opinion, it is wrong. Even if there is no competition, it can build up quickly because it will require equal or slightly more money than yours to develop an almost similar product. If you are competing with a large corporation, it can kill you with the its huge resources. So saying ‘no competition’ is disregarding reality.
Tip:Be prepared and be ready , competition can sprung anytime.
If you feel that there is any other mistake that entrepreneurs need to be aware of, please leave a comment.