“The process of creation is less of an established procedure and more of a trial by error.”
Those of us whose profession involves creating or establishing something know this for a fact. Thomas Edison had to go through thousands of lightbulb designs before he discovered the perfect one. Famous authors go through countless manuscripts and drafts, and churn out dozens of duds, before they hit upon their best-selling work. And venture capitalists fund numerous startups and end up selling our pulling out of them, before they stumble upon a game-changing investment.
The same holds true for entrepreneurs. In setting up and running your own businesses, there is not neat and established procedure on what to do and what not to do. Sure, there are millions of how-to articles and businesses blogs on the Internet. And you can read hundreds of self-help trade books. But not all of the rules will apply to your situation, because each business is different on its own. You and your venture have a unique background, market potential and set of circumstances that make you different from others catering to the same niche.
What’s the bottom line then?Just this: most of the lessons you will learn as an entrepreneur will come from running your business, not from reading books or taking up business courses.
Of course, it’s possible to learn from the knowledge of entrepreneurs who have gone before you. Like you, they made some mistakes over the course of nurturing and expanding their enterprises. In order to avoid making the same mistakes, you need to know what they are.
Mistake # 1: Not being well-versed in the industry
All entrepreneurs enter a particular market for two reasons. Of course, the first is that the market has potential for profit. Two, they choose that particular market because they either have extensive background in it, or it happens to be a hobby or passion of theirs.
No matter how many degrees or doctorates you hold, if you enter an industry where you have knowledge or experience, you are apt to fail. If you wish to penetrate a particular niche without any prior experience in that field, spend a year working in a business that caters to it, and consider as it your apprenticeship. Only when you have learned the tricks of the trade should you start a business of your own.
Mistake # 2: Not being realistic
Seasoned investors know that most companies in the startup phase are likely to follow Murphy’s Law: if something go wrong, it usually will. In other words, it’s very easy for new businesses to get things wrong during their first few years of operation.
As such, anticipate all the possible things that can go wrong. When projecting figures and estimating the budget, it’s better to be conservative than optimistic. For example, if your company needs $10,000 in seed money to start operations, make it $15,000 so you have a healthy buffer and room to maneuver.
Likewise, always look at the worst case scenario. Don’t make the mistake of assuming everything will be alright and run your business according to that mindset. It’s better to have contingencies in place for the worst. If misfortunes do happen, you had the foresight to prepare for them, and at least they won’t look as bad as what you anticipated.
Mistake # 3: Putting off automation
With very little capital to cover all the costs of doing business, a lot of business owners push back automating business processes to the far future. They wait until the business grows big before considering streamlining their operations.
While it sounds logical, it will actually cost more to automate in the future than during the startup phase. For one, entire processes will have to revamped and people retrained. Secondly, automating will take far longer and cost more money to implement the bigger a company grows.
In contrast, startups are much more flexible, and automating during the initial phase will allow the business to get a leg up over the competition. So don’t wait for your company to grow before availing of useful business tools like point of sale software and customer relationship management systems. Making your operational process more cost-effective and streamlined early in the game plants the seed for success later on.
