When starting a new business, mistakes are par for the course. Of course, that’s much easier to admit when you’ve been successful at correcting them. We recently spoke with five entrepreneurs who overcame their first-time business blunders and want to help you save both money and time by not making the same ones.
Mistake 1: Not doing enough research or planning
By the time you make the decision to pursue your dreams of starting a business, the last thing you’re going to want to do is, well, hold off on pursuing your dreams. There are many skills and talents that can be best learned through doing, but starting a new business is not one of them. Planning and research may not be the most glamorous parts of starting a business, but they are definitely among the most important. Without business, financial and marketing plans you may as well be operating in the dark.
Andre Newell, the Executive Producer at Shortlist Artists, is quick to admit that jumping into his first business venture more than a decade ago without any sort of plan did not get his entrepreneurial venture off to the greatest start.
“One of the biggest mistakes I made starting out was not doing enough research. I was excited to just be [starting my business], and skipped a lot of steps,” he said. “My lack of knowledge increased my startup costs significantly, and could’ve ultimately led to me shutting down before I even got started.”
Proper planning and research are time-consuming, but investing in the early stages will help build the right foundation for your business to grow, ultimately saving you both time and money down the road. Figure out your goals, objectives, and the tactics you’re going to use to get there so that your ideas can evolve from words on paper into a thriving business.
Mistake 2: Neglecting marketing and branding
Marketing, especially with a new business, can take many forms. Depending on your product or service and the audience you’re aiming to attract, you may want to promote your business digitally, with traditional advertising, through word of mouth or all of the above.
Your brand should be unique, and ultimately able to express who you are and what you’re about to your potential customers. No matter how great you believe your idea is, the biggest mistake you can make is expecting business to come to you without any marketing or branding.
Pina Crispo, a content creator, blogger and radio show host, isn’t shy when discussing the beginning stages of her career. “There have been tons of mistakes, but I’ve always used them as learning experiences to better myself and my business,” she told us.
As the owner and founder of ChicMamma.ca, she found her niche in the parenting community. Pina spent a long time perfecting her own brand before she could find her perfect audience.
“When it came to branding and marketing, I didn’t originally give the name [of my blog] much thought because I have zero patience, and I wanted everything done immediately. I started with something generic that didn’t really speak to who I am or what I’m about,” she said. “Eventually Chic Mamma was born, and introduced the real, authentic and true me; a hot mess mamma that does the best she can. That’s where my brand really began.” Pina’s Chic Mammas Facebook community was one of the first to be launched in her city and has become a second home for many mothers and mothers-to-be.
Generally speaking, you should aim to spend between 10 and 20 percent of your targeted gross revenue on marketing. As your business becomes more established, those numbers can drop to 5 to 10 percent. While budgets can vary, one thing is certain: you should always leave room to focus on marketing and branding your business.
Mistake 3: Undervaluing your products or services
Izabela Szydlo began her freelancing career in content writing and editing in 2009, as a part-time gig to supplement her income. Six years later, she was ready for full-time self-employment, and that’s when her business, Content, and Commas, was born.
Many first-time business owners find it difficult to set their prices and rates objectively, often looking only to competitors as a guide. Lack of confidence and a fear of failure can also come into play, often leading to undervaluing your products, skills or services.
“When I first started my business, I had no idea how to properly price my services. I found myself questioning how much to charge and how to charge. Per word? Per page? Per hour? I felt like I owed my new clients something beyond my services because I was so grateful for their business, which often resulted in me low-balling my prices or feeling the need to offer discounts,” she said.
If you want to succeed, you’ve got to spend the time figuring out what exactly it is you’re selling and how it stands apart from your competition. Find your sweet spot. In Izabela’s case, she recognized that it wasn’t just copied creation and editing she was offering her clients, it was her entire resume.
“I realized that my rates should be based on a combination of my education, my experience in the field and the effort and time I put into a client’s project. I have to factor things in like research, interviews, rewrites or multiple rounds of editing. All those things take time. Additionally, business owners don’t get sick days, paid breaks or vacation. I consider all of that now when quoting for a project. Knowing your worth can save you from selling yourself short.”
Mistake 4: Skimping on professional services
Starting a new business requires a lot of your time and devotion, and for a while, you probably won’t be making much revenue. Because of this, new business owners often have a hard time justifying certain expenses. This can result in getting into the habit of trying to cut costs by doing things yourself or finding less expensive alternatives to the best available option.
Kareem Rahaman, the co-founder of marketing and communications agency Splash Effect, quoted a man named Red Adair when sharing his first-time business mistakes with us.
“When I think back to that time, one particular quote always comes to mind. ‘If you think it’s expensive to hire a professional to do the job, wait until you hire an amateur.’ My biggest mistake was not hiring professionals to handle our taxes and legal documents off the bat,” he said.
You might think you’re saving money by hiring less experienced people to handle everything from accounting to office renovations, but the truth is cutting corners usually ends up costing you more time and money in the end (especially if you end up having to hire a professional anyway to fix mistakes down the road).
You should also remember that a lawyer or accountant might be successful or even come highly recommended, but it doesn’t necessarily mean they’re experts in your specific field or industry. Before hiring professionals, ask people in your industry that you can trust and do your research.
“Once we had the budget to hire the right people, we realized how much of a difference it made. We learned a lot of tips and best practices used within our industry, like the types of things we could be expensing, or adding clauses into our contracts to protect us if things went left,” Kareem said. “Hiring people to take care of the things that you don’t specialize in is key. You’ll see the return on your investment tenfold.”
Mistake 5: Hiring friends or family
Remember the good old days in the schoolyard, when you got to pick your teammates for dodgeball? You didn’t pick based on skill—you picked based on who you liked the most. Your best friend may not have been the fastest or smartest player, but you picked them first anyway because that was your best friend.
The schoolyard days are long gone, and choosing your business partners and employees will have a much longer-lasting effect on your business than your dodgeball results had on your recess. While you might be tempted to make decisions based on personal relationships, mixing business with pleasure always has the potential to end in disaster.
“One mistake I made multiple times when I started running a business was hiring friends and family members,” said Vered Abramov, co-owner of Or-Top Medics Inc., a medical supply store. “At first things run smoothly, after all, they’re people you love, so spending time with them and sharing your days is always great in the beginning. But soon enough, people get comfortable, lines blur, and soon you’re focusing on dealing with conflict instead of running a business.”
Spend time looking for the right candidates; people who understand the company and the vision, not just people who are looking for jobs. You have to be able to trust these people to help you make your new business successful, and know they’ll have your back during challenging or stressful times. Vered never mixes business and friendships anymore—she’d rather keep the friendships.
So remember: Measure twice, cut once
Jumping right into a new business can be tempting, especially when you’ve got a great idea. But doing things the right way—not the fastest way—will help prevent you from making these mistakes. (And maybe even a few others.)