12 Pitfalls of Starting a Business
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What NOT to Do
No one said starting a business was easy, but some startup mistakes are avoidable if you know what to watch out for. These 12 common mistakes have bogged down many entrepreneurs -- don't let yourself join their ranks
Next: Buying a job rather than a businessMore From SmallBusiness:
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1. Buying a job rather than a business.
Yes, you'll have to be involved in the daily operations at the start, but remember that the ultimate goal is to grow your business into much more than just a job where you work hands-on every day. Work on the business, not just in the business.
Next: Knowing how to do a job but not run itMore From SmallBusiness:
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2. Being a great plumber but having no idea how to run a business that sells plumbing.
Your former jobs are all an apprenticeship to running your own business. Be an apprentice in all areas, not just in the trade or profession of your business. Most important, be sure you've paid attention to all aspects of business in your past jobs, no matter what they were.
Next: Taking on a partnerMore From SmallBusiness:
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3. Taking on a business partner.
Most people give away equity upfront to a partner. Yes, there are examples of partnerships that work, but most don't. Unless you're absolutely sure about your partnership, hire people to help you out instead.
Next: Starting a business from scratchMore From SmallBusiness:
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4. Starting a business from scratch rather than buying an existing operation.
Starting from scratch may seem cheap, but it'll cost you the most expensive asset you have -- time. Buy an undervalued company, and build it up, rather than start from scratch.
Next: Thinking an idea will make the companyMore From SmallBusiness:
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5. Thinking the business idea will make the company.
It's the people who make a business successful, not the product, not the service and not the new invention. Focus on building a great company as much as you do a great product.
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6. Thinking too small.
Many startup entrepreneurs want to generate a wage for themselves and nothing more. Instead, aim to build a profit, aim to build something large, and aim to build something great. If you shoot for the stars, you may fail, but at least you'll make it to the moon.
Next: Competing only through priceMore From SmallBusiness:
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7. Competing on price and price alone.
This is by far the fastest way to send yourself into bankruptcy. Business is about profit, and having a smaller revenue with a larger profit margin will always beat out winning tons of business but earning almost no profit. Learn marketing and sales so you can get out of the price wars.
Next: Cutting costsMore From SmallBusiness:
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8. Trying to cost-cut your way to success.
By saving a wage and doing the work yourself, you forget that nobody's out there drumming up new business for you. Focus on bringing in the business, not saving a few pennies.
Next: Hiring cheap employeesMore From SmallBusiness:
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9. Hiring cheap employees.
You get what you pay for. Getting the right people is crucial, so don't just hire anyone. Wait until you find the right someone.
Next: Focusing only one one areaMore From SmallBusiness:
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10. Focusing on only one area of your business.
Business success involves three main areas: sales and marketing, finance and administration, and operations. You have to keep all three working and growing in unison, not just the area you're good at.
Next: Not testing or measuringMore From SmallBusiness:
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11. Not testing or measuring anything.
Knowing your numbers is vital. In fact, you can't manage what you don't measure. Measure everything from day one, from how many new prospects you have to how many sales you make.
Next: Only getting paid onceMore From SmallBusiness:
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12. Doing the work once and getting paid once.
The key to success is to do the work once and establish a long-term, income-generating relationship. Learn to structure your clients, your business and your income that way, and you'll build a great business.
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