5 Common Mistakes When Starting a Business
For many people, starting their own business is a dream come true. But too many entrepreneurs see their dreams fall apart – their firms fail because of common pitfalls that could have been avoided.
One-third of small businesses fail in the first two years, according to the small business Administration, and a little more than half fail within the first five years.
But that doesn't mean you have to give up your dream. Here are five common mistakes to avoid, so you can build a successful business.
1. Too little cash
"The biggest issue that most entrepreneurs have is money – they're not properly capitalized," says Douglas Long, owner of a management consulting firm that advises entrepreneurs and aspiring entrepreneurs. He recommends his clients have approximately three times what they think they'll need starting out, largely to protect them from any downturns.
Steve Hockett learned that lesson the hard way when he set out to open his own business.
"A few years ago, I was working at a bank and it wasn't a good fit, I was bored and I wanted to become an entrepreneur," says Hockett. Without a business idea of his own, Hockett decided to become a franchisee. Although he picked a very successful franchise, Hockett admits, "I was undercapitalized, it took too long for the business to build and my cash ran out." Forced to abandon the business after only a little more than two years, Hockett says he was "devastated."
"The real thing I missed was anticipating my cash needs and being able to weather the first year," says Hockett, who has since become a successful franchise consultant. "One of the hardest things I've ever done was to make the decision to pull the plug on a dream."
2. Thinking small
You may be competing for customers against larger companies with more resources. But you don't have to show it.
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Uncategorized | admin | 19 May 2006 |
