Who does not want to be their own boss? Yes, becoming an entrepreneur and starting your own business is definitely tempting. Tempting, but it is not an easy task. One of the biggest problems young entrepreneurs face today is converting their idea on paper to a scalable business model. Do you know enough? Should you do the math yourself? How long should you wait till your business hits the break-even point? Do you need more experience or are you ready?
Usually, the first year of the venture is considered to be the most crucial year. You either do well or you go down. You go hard or you go home. No gain without pain. (Okay, you get the idea.) One mistake and it is over. Well, not one but hey, no mistakes is better than one mistake right? So we look at the most common mistakes young (or old) entrepreneurs make in their first year.
- The dearth of research: Remember the first question I raised? Do you know enough? Well, the biggest mistake you can make is not knowing enough. There are thousands (if not millions) of ideas out there and each and every one of them needs sufficient prior research. Converting your idea into a viable business model is not possible without testing the hypothesis- which is impossible without ample research. It can be as formal as a PowerPoint presentation or as informal as sticky notes but data related to a potential customer base, competition, and business environment is crucial to lifting off.
- Moving ahead with false assumptions: Thorough research cannot guarantee success. There will be bugs in the financial estimates and the business math (That answers your question if you should do the math yourself).Usually, people tend to move ahead in their business with flawed assumptions, unrealistic expectations and too much blind belief accompanied with a tad bit of ego. This combination is disastrous and if you don’t believe me, well you should. A simple solution is to beta test your prototype before launching. Feedback never harms the business and it always pays to go back to the drawing board.
- Scaling up too soon: After lift-off, entrepreneurs usually start looking for growth and to generate income. (can’t blame them right?) But there is a problem. Scaling up requires real deep pockets. It involves hiring new people, leasing office space, marketing and publicity and all the usual exciting stuff which unfortunately need a lot of funding. If you don’t have necessary funding for this, your business will fizzle out before you can even say *growth*. Experts advise to nail it first and then scale it up. Short term goal, perfecting the product and revenue model must be followed by scaling up.
- Not keeping track on expenses: Keeping overhead costs low is essential for a budding start-up. Whether it is settling for a cheaper wallpaper or a sacrificing plush furniture, you need to be as frugal as you can be. Make a rough estimate of your seed capital and stick to it. It is not only testing your discipline but also makes sure you survive when the sun isn’t shining. (Because it can cold out there. Jk)
- Underestimating manpower requirement: The golden rule of entrepreneurship is to not waste time on things that can be done by someone in a faster, better and preferably cheaper way. You need people who would do other things so you can handle the core functions. Although you do not see your customer, there must always be people who can handle their grievances quickly. Nothing will kill an e-commerce faster than bad customer feedback after launch.
- Not maintaining a financial buffer: The hesitation amongst people to start a venture is because they are the sole breadwinners of their families and thus cannot afford to risk everything they’ve got. A working spouse can give you a breather but otherwise, loss of regular income is a burden that many aren’t willing to carry. This is why you must estimate how long it will take beefier your venture starts minting money. Experts say you must have contingency funds to last 6-8 months to keep the business alive.
Losing hope: This might not be technical mistakes the ones mentioned above. But nevertheless, it is as important as any. One must have faith in the venture and must have a clear goal while proceeding. That being said, one must also know when to stop let it go because let us face it, all of us make mistakes. Accepting them and learning from them is what winners do that quitters don’t.
Now that you know what you’re not supposed to do, go and start doing what you’re supposed to do. Remember, entrepreneurship is not easy but it definitely worth it.