5 Common mistakes to avoid when starting a business

Like every entrepreneur, Atieno (not her real name) was doing her best to cut on costs when she started a playschool in her 3 bedroom house.  It seemed like a bright idea to get children from the neighborhood who did not have caregivers.  The only problem is that Atieno underestimated the need and soon her play school could not accommodate all the children who were being brought to her doorstep. 

When she was pricing, she had not factored rent and staff into her equation because she felt she could manage the outfit by herself.  But now with the growth, came the need for new premises, more staff and more amenities.  Her price had attracted the clientele and if she were to get another place she was not going to afford to keep her doors open at the current prices.

Atieno’s competitive advantage was her price so she had to make the tough decision of closing the school and going back to the drawing board.

When starting a business there are many factors to consider and the following are a few common mistakes you can avoid:

1.  Bad pricing

Without an accurate understanding of her costs, Atieno couldn't price her products correctly. This is not an isolated case.  Many startups fall into the trap of bad pricing due to wrong product pricing which include failing to factor in other costs that will be associated with producing and delivering the product.  A solid business plan will help you avoid these pitfalls.

2. Wrong team

Atieno did not even have a team, let alone a wrong team. A wrong team can result in a loss of income and time while depleting morale. The mistake most people make is hiring friends and family because they are affordable. You need to hire people because they are competent and have the required skill set. They should also share common values and have ability to work together through good and bad times.

3.  The Perfectionist Syndrome

Seeking to have a perfect product or waiting for perfect conditions before you begin is a terrible mistake. Define what you want to do (business plan), create the map (strategy) then begin. Commit to make movement on a purposeful direction instead of waiting for perfect conditions.  Remember the longer you wait to launch the longer you will go without money.  Your product will evolve and the sooner you start the sooner you will find a good fit for the market.  In a nutshell don’t wait till you have a perfect product. Good is good enough.

4. The fear of technology

I remember when I started my own business I had a difficult time with web designers.  As a speaker, a website was non-negotiable and I couldn’t get someone to do it right or effect the changes in a timely manner.  That forced me to learn how to do simple websites. I now help my clients build start up websites and train them on how to manage them. I am not advocating that you should change your “passion” and acquire a new skill.  Find out what aspects of technology are relevant for your business. Even if you hire someone do not rely on them too much that you cannot function without them. 

5. Refusing to invest in professionals

One thing startups need to understand is that there is more to running a business than having a technical skill.  There are core business skills required and investing in a professional like a lawyer, accountant, business consultant or other technical skill sets is not a waste of money but rather an investment.

For example, social media is great but you need a marketing strategy to get it right in order to attract the right people and actually make money.

The good news is that you can turn your passion into profit, one step at a time. If you make a mistake, it is not the end of the world, learn from it and keep moving on.

Photo: thestartupstore.com

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