Are you a new entrepreneur and feel like you have no idea what you’re doing? Generally, many new entrepreneurs feel this way when starting their first business.
When I started my first business, in my twenties, I had no clue what I was doing. Throughout the years, I’ve learned from my mistakes and successes, leading me to become the successful entrepreneur I am today. To prevent you from making rookie mistakes, I’ve outlined the five mistakes new entrepreneurs generally make and provided my insight to help you potentially avoid them.
Disclaimer: This information is for informational purposes only and should not be interpreted as tax or financial advice. Please do your own research and seek licensed advisors.
#1 Not Being Financially Literate
Financial literacy is a fundamental concept every entrepreneur can learn to become more knowledgable. Financial literacy is critical for any entrepreneur because it helps them understand how money works and how to manage their finances. Without financial literacy, their business may run into roadblocks. Some financial literacy concepts may include:
- Return on Investment (ROI)
- Revenue Versus Profit
- Good vs Bad Debt
For example, let’s say you’re an entrepreneur who started a business and wants to purchase a new software program for building sales funnels, emails, and advertising. This software program is an asset because it could help you reach more customers. In addition, you can calculate the ROI for the software to ensure it’s a potentially good investment for your business.
How You Can Improve Your Financial Literacy
The best way you can learn to improve your financial literacy is to read books and watch videos about financial concepts. Studying complicated financial concepts might not be exciting, but it could be the difference between a thriving business and a failing business.
#2 Thinking They Need to Know Everything
Becoming an entrepreneur usually comes with a burning desire to know everything about business and the world. However, you might not know everything if you haven’t experienced anything.
Some of the best lessons I’ve learned during my entrepreneurial journey were from my failures. Each failure taught me a valuable lesson that I’ve carried throughout my journey. So, remember that you don’t have to know everything; you just have to take action and learn as you go.
#3 Trying to Solve a Problem That Doesn’t Exist
You may have a brilliant idea for a business you think everyone will love. Then, you go to market your product or service and don’t make any sales. I see this happen all the time with new entrepreneurs. They think they have the perfect solution to a problem and try to sell it to the market. The issue is that the market didn’t know the problem existed, so there was no demand for their solution.
What You Can Do Instead
Before trying to solve a problem on your own, try looking at the common issues or gaps in the market. Try to figure out the market’s pain points and devise a solution to that problem. As a result, you already know what the market wants, allowing you to potentially create an in-demand product or service.
#4 They Don’t Learn Sales Tactics
For some reason, many people assume that entrepreneurship and sales are two different things. However, entrepreneurship and sales can play off each other to create the ultimate business duo. Entrepreneurship is developing a product or service to sell by starting a business. Sales is the ability to sell that product or service to potential customers. Some common sales tactics can include:
Understanding these sales tactics can help you improve your marketing and potentially increase your sales.
Focus on Helping Not Selling
In addition to being fluent in sales, you might want to avoid “selling” your product or service to people. Generally, people don’t want you to sell to them. They want their voices heard. So, by listening to potential customers and their pain points, you can help them with their problems, potentially leading to more sales.
Nike is an excellent example of a company that doesn’t “sell” its products to customers. Nike doesn’t tell everyone to buy their products; they show people what they could have by using their products.
They are successful because they sell an idea rather than their products. They want you to believe that their products will help you “Just Do It” no matter what.
#5 Not Developing Multiple Streams of Income
Generally, many entrepreneurs think they just need one product or service to thrust them into wealth. However, one business might not make you wealthy. Combining your business with various assets such as investments and passive income streams might be a better strategy for building income.
For example, you could have a blog that makes you a certain amount. You could also own real estate properties that bring in consistent cash flow every month. My suggestion is not to stop once you’ve built your business. Try to add as many income streams as possible so that if one of them fails, you potentially have several others.