Odds are not usually favorable for new businesses. According to data shared by SBA, about half of the new small businesses shut down within five years, and two-thirds will close in a decade of the day they began their operations. Though various factors are out of control for new business owners, a few common mistakes can be avoided to help a business flourish. Read on to know the Common mistakes made by new business owners and how to avoid them,

Common mistakes made by new business owners and how to avoid them-

• Choosing the Wrong Business Entity

New business owners often choose sole proprietorship as a business entity as they like the idea of everything being in their name. However, the problem with this entity is that you will lose everything you ever owned if things go wrong. 

How to Avoid This Mistake- Talk to a legal advisor about what business entity to choose. Usually, a limited partnership, a C corporation, or a limited liability company are advised by experts. 

• Not Protecting the Key Ideas

In many cases, new business owners get too excited about their unique ideas and share them with friends, family, or social media. Unfortunately, they do it without seeking legal protection and often end up with the regret that someone stole their ideas. 

How to Avoid This Mistake- Before sharing your business ideas, make sure you protect them with copyrights, trademarks, and other legal protections that will prevent anyone from copying your ideas and promote them as their own. 

• Making Bad Hiring Decisions/Choosing Wrong Partners

Often new business owners are in such a hurry to build a team that they make bad hiring decisions or choose their close buddies as their partners. When you hire or partner with someone who doesn’t understand the business or the audience’s needs, your business might suffer. 

How to Avoid This Mistake- A simple way to avoid this mistake is to keep your personal/professional lives separated when hiring new employees or initiating a partnership offer. 

• Not Fixing Bad Decisions

New business owners usually don’t see their mistakes until it’s too late. For example, if they have hired a wrong employee, they hesitate to fire that person and try to ensure the person blends in somehow. The same goes with partners. New business owners often don’t let go of partners as they have a personal relationship with them. Both scenarios are harmful to a business. 

How to Avoid This Mistake- If you want to fix a hiring mistake or know you have chosen the wrong partner, learn to let them go. Part ways amicably and ensure that there is no bad blood between you. 

• Being Afraid of Risks

Risks are essential to attaining business growth. Unfortunately, many new business owners forget this mantra and fail to take their business to the next level as they fear failing. Avoiding risk often translates to letting go of opportunities. Do it often, and your business might sink. 

How to Avoid This Mistake- Being afraid of risks is okay. But avoiding them is not. Have a risk management system in place and always take calculated risks to steer your business in the right direction. 

• Not Getting the Basics Right

When you initiate a new business, you need to ensure that you have a vision, mission, and core values in place. Set goals for your business and ensure that you keep changing them with time. If you don’t do that, none of the stakeholders would be able to connect with you. Your business should never be just about making money. It should also be about helping your customers. 

How to Avoid This Mistake- Decide on a vision and mission statement before you begin a business. Also, set specific core values that will later become your business culture. 

• Depending Too Much on Others

Hiring outside consultants or experts is a necessity for new business owners. But many new business owners make the mistake of depending too much on external advice and not using their skills, abilities, knowledge, and data to make crucial decisions. It cannot be good for a business to lean on someone who is not as connected with your organization as you are. 

How to Avoid This Mistake– When making decisions, consider the advice of multiple people, not just one. Also, use your instincts and data-driven facts to make business decisions as a new business owner. 

• Not Mapping Customer Needs/Expectations

Many new business owners are so inclined towards making their business successful that they assume what the customers want and devise their business products and solutions accordingly. It often leads to creating products or services that are not even needed by the target audience. It can also turn into an epic business failure. 

How to Avoid This Mistake- You can avoid this mistake by communicating directly with the customers and mapping their needs and expectations. To connect with customers, you can use market research or use social media tools. 

Final Words

Recognizing the common mistakes made by new business owners and how to avoid them is the key to the success of small businesses. New business owners or aspiring entrepreneurs should take a step back from time to time and evaluate past decisions. Doing analysis and fixing the mistakes from time to time will ensure that a business flourishes even in tough times and grows to where you want it to be!

References:

https://www.allbusiness.com/8-common-mistakes-small-businesses-make-avoid-22951-1.html

https://www.profitableventure.com/common-mistakes-to-avoid/