5 biggest Mistakes Entrepreneurs Make

top 5 biggest mistakes entrepreneurs

“Persistence is the mother of good luck Fall down six times and get up five and you have failed because you quit.”

Fall down 10 times and get up 10 and you are a success.

So says Tim Sole in his book Make Success Your Friend ? One hundred and one practical tips for what succeeds.Sole, who is a previous CEO of the Public Trust, says in a section of the book on persistence, that people who succeed have often failed more than many of the people who don’t succeed.”Check the arithmetic of the example yourself. Frequently the only difference between success and failure is persistence.”In his book Sole says it is normal to have setbacks as progress often has a pattern of two steps forward one step back. When things go consistently wrong the thing to do is to be flexible in your methods, not your goals.”Persistence pays because life’s gems are often uncovered in unexpected places at unexpected times.”He says the measure of success is as much about the obstacles you overcome as the outcome you achieve.”Laziness is the habit of resting before you become tired and success is often found between tiredness and exhaustion. If you give up a goal knowing that there is something you could have tried but did not, then you gave up too soon.”Be persistent because persistence is the mother of good luck. Armed with self-discipline and determination, your goals are three quarters achieved. In the game of life the score at half time does not matter.

Mistake Number 1 Entrepreneurs Make – Undercapitalisation

Almost all of our advisers listed a shortage of finance as a major stumbling block to progress in business. Often the start-up risk factor causes would-be
financiers to shy away.Neil Richardson, who chairs the Foundation for Research Science and Technology and also chairs a number of businesses including Visique
Optometrists and Endace Measurement Systems, has seen it happen.”Being undercapitalised is not only about lack of equity, but also the lack of
appropriate debt facilities from a bank that understands the new business and  its risk-reward profile,” he says.

“This is a significant problem in New Zealand where there is both a lack of
risk-taking new venture equity, and very few banks willing to lend against
businesses. Rather, they require personal guarantees and real security that is
typically not available in start-ups.”

One cure for early cash-flow woes is to dig your well before you need it.
Arrange that “opportunity” or “mistake” finance well in advance, so you don’t
have to rely on banks at the last minute.Denis Orme, who is the CEO of Bartercard and author of Lessons from Leadership Failures – The Greenfields Approach, believes it’s about planning beyond the initial start-up. “Many start-ups exceed their initial projections and then [the] principals scramble to pull the resources together to get the business to the next level.”These resources don’t just include cash flow, but also people, supply chain management, plant and equipment. Orme advises entrepreneurs to have a monthly cash?flow plan forecasting out over the initial 18 months, to facilitate”mid?course corrections”.

Mistake Number 2 Entrepreneurs Make – Lack of business expertise

This problem manifests itself in many ways, particularly when the entrepreneur or inventor has a great commercial concept, but doesn’t think
like a businessperson.According to business author Ian Brooks these people fail to see things through customers’ eyes. “Rather than creating value for customers and
asking what a product or service can do for them, they are more focused on making the product or on selling,” he says.”This leads to the less than satisfactory outcome of looking at their business from the inside out. Their business approach becomes all about self protection and making life easier for them.”Author of 12 business books including Putting the Customer First, Brooks advises new business owners to focus on creating more value for customers,rather than being tempted to go down the discounting path.”Create more value, then sell that value constantly,” he says. “People make the mistake of being hunters not farmers ? in other words, they focus on
finding new customers, rather than looking after their existing customers first.”All this comes back to a lack of basic business skills and knowledge.

Mistake Number 3 Entrepreneurs Make – Poor research and planning

Insufficient market research can lead to big disappointments down the track -this according to Kate Wilson, a registered patent attorney with Hamilton law
firm James & Wells.Wilson is keen to see businesses grow through intellectual property protection and strategy, and works with many entrepreneurs to help commercialise
innovation.”First they must ask, is there a demand for my product? They need to check
competitors’ products, and search the market for competitors that could eventually become collaborators,” she says.”Do your intellectual property research – what other patents and trade marks are out there? And what is it about your product that gives it the edge?”Planning is not just a nice thing to do; it’s absolutely essential as is the
thorough testing of products and business models before going to the market.Even though the proverbial windows of opportunity are constantly getting shorter, research and planning is not an area to scrimp on. How up-to-date is your business plan?

Mistake Number 4 Entrepreneurs Make – Hiring the wrong people

Bill Gallagher, of Gallagher Group, speaks from considerable experience when he says “be very careful who you hire, the cost of employing a lemon is
enormous”.’Keeping a business afloat is all about putting square pegs in square holes, and round pegs in round holes ? shuffle people around too much and the ship
sinks,” he says.It’s all about matching people with the right job, and staff promotion can be a particularly tricky area. It’s easy to promote people past their level of
competence. Just because someone’s good technically, doesn’t mean they’ll make a good business manager,” Gallagher says. “Go down that path and you’ll not only lose a good tradesman, you’ll also gain a lousy foreman.”Gallagher says working with a competent recruitment specialist doesn’t make you immune from poor performers either – “ultimately it’s your responsibility. If you’re hiring someone from overseas, get several reference checks and talk to referees who aren’t personal friends of the applicant.”
A good rule of thumb is to hire the very best person you can afford at any given time.

Mistake Number 5 Entrepreneurs Make – Insufficient marketing

For every dollar spent in developing a product, five times that amount should be spent on marketing it. Unfortunately a large number of entrepreneurs fail to grasp the importance of marketing – they assume the product (or service) will sell itself, and customers will just come. “This is surprising when you ask entrepreneurs what they should be concentrating on most in their business,” says Gaelle Deighton, CEO of Enterprising Manukau, and the Economic Development Agency of Manukau
City.”They usually say marketing, and this is evidenced by the high numbers of attendees at marketing seminars and workshops.”Steve Corbett, who heads up Massey University’s business incubator, the ecentre, says taking products to market costs, and financial projections should always allow for marketing expenses. “And while the market size is important,it is customers that you need – they pay the bills.”Orme believes it is crucial to implement a month-by-month marketing plan.
“Seduced by the first few quick sales there can be a gap before a sufficient flow of prospects is built up in the sales funnel,” he says.Implementing a month-by-month marketing plan that involves client relationship management, visibility-related activities, and targeting of new prospects and potential referral sources will ensure you have a steady stream of profitable new business.”

“Happiness does not come from doing easy work but from the afterglow of satisfaction that comes after the achievement of a difficult task that demanded our best.”-Theodore Isaac

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