WORST MISTAKES MADE BY NEW ENTREPRENEURS

A big part of starting a business is making a plan and then sticking to it. Being a part of a startup isn't always glamorous, and it often just means submitting to the process.

Taking precautions to avoid common mistakes made by new entrepreneurs is part of the process. Here are nine blunders to avoid when starting a new business:

Spending too little or spending too much money

Money is likely to be one of your primary concerns as a new entrepreneur. Because pre-launch cash flow is likely to be minimal, making and saving money will usually take precedence over everything else.

I typically see two mindsets among new entrepreneurs: "You have to spend money to make money" or "I'll spend the bare minimum until I have some decent cash flow."

Both of these attitudes, when taken to their logical conclusion, can be harmful. Spend your startup funds wisely, but don't be afraid to invest in quality people and products. This will benefit you in the long run.

Setting unattainable goals.

New entrepreneurs may become so enamored with their "big idea" that they work without a solid plan. However, in order to succeed, you must set realistic and attainable goals.

Make it a point to set both short- and long-term goals, and make them specific. Don't just say, "This year, I want to make $1 million." Set a reasonable goal and then determine the specific steps required to achieve it.

Making cost-cutting hiring decisions.

This is closely related to number one, but it is so important that it warrants its own mention. When money is tight, it's tempting to cut corners on new hires. The problem with this strategy is that it will cost you in the long run.

Low-cost employees and consultants are usually that way for a reason: they are more likely to be inexperienced, unskilled, or untrustworthy (or all three).

You believe you have no direct competitors.

The excitement surrounding a new product or business can often lead new entrepreneurs to believe that they have no direct competition, or that their product is so far ahead of their competitors that they are in a league of their own.

In reality, having no direct competitors is extremely rare. Unless you've invented a completely new product, someone in your niche will already have a market share. 

Do your homework to learn about these companies and how you can differentiate your company.

You believe you can handle everything on your own.

It's natural to believe that no one else can do the job as well as you. You know your products inside and out and are the only one who truly cares about the company's success.

This, however, is not only a recipe for burnout; it can also significantly impede your success. A knowledgeable, experienced consultant or mentor can provide you with much-needed objective insight into your business and market.