First Time Entrepreneurs: Stop Doing These 5 Mistakes At Any Cost
By Storeplum Editorial
Posted | 7 min read
Let’s be honest about it. Entrepreneurship is hard. It expects years of commitment and dedicated hard work from you. Although difficult, it can be the most fulfilling and thrilling experiences of your life. But at the end of the day, the primary goal of any business is to make money. If you do not make money, you don't have a business. It is that simple.
First time entrepreneurs fail to understand this. It does not mean that you need to have a formal education in entrepreneurship or in selling things. What you definitely need is an iterative process to quickly find out what works and what doesn’t and make a pivot accordingly. Let’s take a look at some of the most common mistakes made by new business owners-
#1 Jumping In Without an Idea Validation
The journey of entrepreneurship begins with an idea. For many, this one eureka moment is more than enough to pursue their dreams of entrepreneurship. But you should ideally not jump the gun before understanding a customer's pain.
A common misconception is that customers with pain/problems will eventually find you and will be willing to pay for your product. It may sound discouraging but, this rarely happens.
Validate your idea before even investing a lot of time and energy in building your product/service. Follow this simple 2-step method to validate your idea- Identify potential users who may buy your product. Close friends and family members will always have YOUR best interest in mind and not your business's. More than often, you’ll get biased feedback from them because they like you and they will always tell you how good your idea is. This is actually a dangerous precedent to begin with.
Once you’ve found these potential users, do not directly pitch them your idea to see if they like it. Ask them questions about their life, specifically, about actions that involve around the pain point that you are trying to solve. Eg-
- Ask when did it happen (customer pains)
- What did they do to solve the pain
Asking these questions to the right potential customers will give you a fair understanding of whether the problem that you are solving is big enough of a problem or maybe you’ll even discover a larger problem your potential customers may be facing right now!
Repeat this process until your conviction is backed by data. An idea which is backed by solid data is your first step towards success.
#2 Failing to Delegate Tasks to Others.
Another common theme which is seen in first time entrepreneurs - They want to do everything by themselves just because they can save potential costs. There is a difference between running a business and working in a business. You lose your most important asset in the process of working in your business - Your Time.
Let’s say if you are running an e-commerce business selling premium organic food products. Your expertise is in making the food product but to save some money, you’ve also decided to spend time taking product photos, creating graphics all by yourself. Now, let’s say if there’s a sudden surge in your orders (good problem to have by the way), but you cannot fulfill/ manufacture products immediately because you spent time in some other process which could have been easily delegated. This leaves you with two choices- cancel the orders which you cannot process or delay shipping until you restock. Either way, you’ve lost business from these customers.
A successful entrepreneur hires the right people for the right job. It might feel that it’s not the right time to hire people yet, I do not have a budget or my business doesn't need extra hands.
Think twice. As a business owner, you know exactly at what skill you excel at. Delegate the rest.
#3 Not Investing In Marketing Efforts
Marketing is a fairly involved process and it is something which shouldn’t be taken for granted. Yet, several new business owners fail miserably in its execution. Many rely on word of mouth. Although it's the least expensive way of getting the word out, it is also the most time consuming method of marketing, often yielding poor results. It is as good as relying on hope to run your business.
Instead of considering marketing as an expense, it should be purely considered as an investment.
Before you even begin marketing your product, you need to market yourself to the prospect. The first sales are always going to come from strong references. Put efforts in positioning yourself and your product to be different from the competition.
Cheaper/ Affordable cannot be the only differentiating factor. If you position yourself or your product as a cheaper alternative, chances are your prospects will also start questioning the product quality, Infact, even the people that you know are never going to buy your product will question its quality and your business in general.
People buy with emotions, Logic comes later. Hire a quality copywriter who can help you put out your message in convincing words. It is one of the most cost-effective ways of driving traffic to your website or reaching out to a prospective customer.
If you are marketing on the Internet, there are a lot of free CRM tools available today which help you in collecting user data, reports, heat maps to understand user behaviour on your website. Spend time nurturing leads and understanding this data to use it for your advantage.
#4 Relying On a Single Source for Sales.
Business veterans say that any business has two crucial parts - building product and selling it. If you’ve validated your idea and narrowed down your market segment, then selling your product becomes relatively simple. Relying on just one channel to sell your product is a risky game. It’s like planning to climb Mt. Everest with just one small oxygen cylinder, without considering what may happen if you run out of it. Spend enough time on finding at least 3-4 different sales channels and work on all of them at the same time. In our example of premium organic food store, there can be different sales channels like-
- Online Store
- Product licensing
- Local distributors
- Upselling additional services to existing customers.
Having multiple channels of distribution helps you cover your market quickly and efficiently. These revenue streams also help you in clearing up the bigger picture. Once you write these down, it becomes easier to test and pivot as well as focus more on the most money making revenue stream.
#5 Penalizing Customers for Your Shortcomings.
This one is an utterly unpleasant experience for your customers. More than often businesses restrict themselves by not offering the most obvious options which their customer segment is already used to.
In our premium organic food business, there can be restrictions to credit card only or cash only payments, not offering returns or heavy cancellation charges etc.
If your customer segment is used to certain experiences, your goal should be to make it better, not the opposite way. Customers are willing to pay extra for the convenience. They may even refer you to more business just because you went above and beyond to satisfy their needs. If you make this experience difficult for them, chances of coming back for repeat business diminishes by 50%.
One of the most common reasons why businesses fail is because they do not have a plan. Having a solid plan and an execution strategy dramatically improves your chances of being successful at your business. Unfortunately, not many entrepreneurs understand it’s importance or they just procrastinate until it's too late.
Our goal here at Storeplum is to empower you with the right information and provide you with tools to build a successful business on the Internet. If you are interested in reading more articles like these, check out our website for more information
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