5 mistakes that start-up entrepreneurs make
http://www.accountingfacts.net/articles/7618/1/5-mistakes-that-start-up-entrepreneurs-make/Page1.html
Steve Troy
Steve Troy is Pres of AeroFund Financial, Inc. a direct commercial lender specializing in providing accounts receivable financing & factoring for small - medium sized businesses nationwide. Learn more at http://www.aerofund.com
You have the right to re-post this article including the Authors Box By Steve Troy
Published on 09/14/2010
There isn't some magic manual on how to start a successful business. However, if an entrepreneur can avoid certain mistakes, the likelihood of success dramatically increases.
5 mistakes that start-up entrepreneurs make
There isn't some magic manual on how to start a successful business. However, if an entrepreneur can avoid certain mistakes, the likelihood of success dramatically increases.
Lack Of Capital
Too many newly formed businesses end before they ever got a chance at success. The reason... they failed to completely calculate start-up costs prior to opening the doors. Rent, inventory, equipment, and marketing funds are a given. What many forget is the company isn't likely to turn an instant profit. So, capital will also be needed for utilities, insurance, employees, and any other overhead expense.
Too Much Capital
This can be just as much a downfall as having too little capital. When a new business is flush with cash, there's a tendency to stray from necessity and opt for every frill. The company may waste resources to hire too many employees; too big a venue; outlandish advertisement; or trade shows, parties, booths, etc... before they know if this capital will be needed to float the pre-successful company. If you have extra capital, it should be saved.
Absent Business Plan
All companies don't require a formal business plan. However, if your start-up requires capital to grow and time to turn a profit, then you need some sort of business plan. It should forecast the amount of time and money it will take to make it to the profit line and set clear goals to get there. You should think about the key elements that make your business tick and have a model for three years of profit, cash-flow, and sale projections.
Dubiously Killing A Business Plan
Most of the time failure is on the shoulder of not having a business plan or having a scant business plan. However, some new businesses will never see the light of day because the entrepreneur is too afraid that their business isn't 100% guaranteed for success. There will never be such a business plan, as every business is a giant leap of faith.
Overpaying Advertisement
You should never spend more money getting a customer than you make selling the product or service to the customer. A big advertising budget may bring customers, but it's still a losing proposition if you aren't either selling a very expensive item or gaining a repeat customer of a less costly item. Use small allotments to test a variety of marketing strategies. When you finally find one that works, build your marketing campaign around it.
It doesn't matter how many books, articles, and "how to guides" an entrepreneur reads, it's impossible to start a business without making a few mistakes. The key is avoiding detrimental and insurmountable mistakes.
Lack Of Capital
Too many newly formed businesses end before they ever got a chance at success. The reason... they failed to completely calculate start-up costs prior to opening the doors. Rent, inventory, equipment, and marketing funds are a given. What many forget is the company isn't likely to turn an instant profit. So, capital will also be needed for utilities, insurance, employees, and any other overhead expense.
Too Much Capital
This can be just as much a downfall as having too little capital. When a new business is flush with cash, there's a tendency to stray from necessity and opt for every frill. The company may waste resources to hire too many employees; too big a venue; outlandish advertisement; or trade shows, parties, booths, etc... before they know if this capital will be needed to float the pre-successful company. If you have extra capital, it should be saved.
Absent Business Plan
All companies don't require a formal business plan. However, if your start-up requires capital to grow and time to turn a profit, then you need some sort of business plan. It should forecast the amount of time and money it will take to make it to the profit line and set clear goals to get there. You should think about the key elements that make your business tick and have a model for three years of profit, cash-flow, and sale projections.
Dubiously Killing A Business Plan
Most of the time failure is on the shoulder of not having a business plan or having a scant business plan. However, some new businesses will never see the light of day because the entrepreneur is too afraid that their business isn't 100% guaranteed for success. There will never be such a business plan, as every business is a giant leap of faith.
Overpaying Advertisement
You should never spend more money getting a customer than you make selling the product or service to the customer. A big advertising budget may bring customers, but it's still a losing proposition if you aren't either selling a very expensive item or gaining a repeat customer of a less costly item. Use small allotments to test a variety of marketing strategies. When you finally find one that works, build your marketing campaign around it.
It doesn't matter how many books, articles, and "how to guides" an entrepreneur reads, it's impossible to start a business without making a few mistakes. The key is avoiding detrimental and insurmountable mistakes.