4 Pitfalls that Bedevil Newbie Entrepreneurs and How to Avoid Them

June 6, 2017 at 8:55 AM Leave a comment

Many individuals dream of quitting their jobs to become entrepreneurs. These people often feel caged and unsatisfied in their 9-to-5 jobs. Unfortunately, many don’t realize how difficult it can be to run an effective and profitable business. Owning a company is much more difficult than working in a standard 9-to-5 job.

Starting a business comes with added risk. More than 50% of new businesses fail in the first five years because of a mix of internal and external factors. If you want to become an entrepreneur you must be aware of the common business pitfalls that lead to failure. To maintain a profitable business you must keep the list below in mind.

  1. Starting a job and not a business

Most newbie entrepreneurs think that being your own boss at a business will afford you the freedom to control your working hours and create time for other important areas of your life. However, you need to understand that a “business” that requires your presence and hands-on input to run is not a business yet. At this point it is still a job – it only becomes a business when it runs and make money in your absence.

Of course, you might need to be involved in the hands-on operation at the start; however, you should always look for ways to grow your business into a money-making machine that runs effectively.

  1. Starting a business from scratch when there’s a better offer to buy

Newbie entrepreneurs are often disillusioned by the idea of creating a lasting business legacy – and they want to build it from scratch. In addition, starting a business from scratch seems like the cheaper way to go if you don’t have access to startup capital. However, starting a business from scratch will cost you a great deal time of money. It will also take you longer to build your business legacy.

If you want to go into business and you have the funds, it might be a smarter idea to look for an undervalued business that you can buy and re-imagine with your own vision. Of course, you’ll need to conduct due diligence to be sure that the core operations of the business are healthy and steady before you purchase it.

  1. Running out of money

As obvious as it sounds, running out of money is one of the deepest sinkholes that entrap newbie entrepreneurs. Some entrepreneurs run out of money because they didn’t allocate their startup capital properly. For instance, spending a huge part of your startup capital on getting the best office space outfitted with ping pong tables and game consoles without thinking about the cost of product development and marketing could lead your business into failure even before you start.

Research streams of business funding before you set out. These will ease your financial worries before you start.

  1. Making cheaper prices your USP

In order for your business to survive and thrive profitably you must have a unique selling point (USP). Many entrepreneurs make the mistake of competing with established businesses by offering cheaper prices. Offering cheaper prices will definitely get you clients faster but it could also get you out of business twice as fast.

For one, a new business doesn’t usually have the financial war chest to compete with established rivals on price. More so, competing on price and price alone will get you many customers but you won’t have decent profit margins.

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