3 Mistakes First-Time Entrepreneurs Should Avoid
If you go out on your own, steer clear of these mistakes
First-time entrepreneurs tend to make similar mistakes—in good economic times or bad. If you're considering venturing out on your own, steer clear of these mistakes:
1. "Forget research and planning—I just want to get going." "We often find that people haven't thought through their business, and that's what tends to get them into trouble," says Eric Zarnikow, associate administrator for the U.S. Small Business Administration's Office of Capital Access. "A business plan is really the road map of how they're going to go about running the business. It will help them determine what resources they need financially or otherwise...It's also going to be a key thing in talking with a bank or other financing sources about their business."
Doing your homework doesn't eliminate risk, but it can help you "understand risk and when it might come up and what options you have for how to deal with it," says Dennis Ceru, who teaches graduate courses in entrepreneurship and business strategy at Boston University and Babson College.
2. "I'm sure cash will come in quickly." "As a general rule, getting to be profitable in a small business typically takes longer and costs more than anyone plans for," says John Bjeldanes, a San Diego-based business counselor with SCORE, which offers advice to small businesses. "If there's no leeway in the [business] plan, you run into problems," he says. Ceru suggests thinking of your business as a life form that has to pay three to nine months of "living expenses" like rent and phone service while you're busy finding customers.
3. "Now is a good time for me, and it's about me." When unemployment goes up, start-up rates go up, according to Scott Shane, author of The Illusions of Entrepreneurship: The Costly Myths That Entrepreneurs, Investors and Policy Makers Live By. "We see an uptick as the economy gets worse, but that's probably not a good strategy," says Shane, a professor at Case Western Reserve University. It's important to honestly assess—regardless of your personal situation—whether the opportunity is right. Shane says, "The market doesn't care whether you really want to be an entrepreneur, and that's one of the biggest mistakes people make."
Reader Comments
waste of time
I also feel that some people are born to be true leaders in the business world! I own two businesses, an insurance ageny, and a contracting company. If one thing i might add to this article as a young entrepreneur (27). I have learned that in order to be very successful at being your own boss in todays fast paced would, is not to limit yourself too one specalty! I to never went to college, but i do have a vo-tech degree in devesified occupations witch was accuired during high school!! if a person is disaplined enough, and motivated enough. and very good at pinching pennys ( for the first 5 years or so!!). will do well. the hardest part is taking that first step to going out on your own!!!!
College degree doesn't guarantee success
I am currently a very successful business owner with only a high school education. Getting married just out of high school forced me to enter the job market without a degree. To be honest, I would never have attended college in the first place. My opinion was most classes offered in college were a waste of time. I also felt confident what I learned in high school, especially reading, english and math, along with my personal desire to succeed were all the tools I needed. I entered the job market and found it easy to stand out by performing at a higher level than all other employees. I worked in several different industries at first then settled into the trucking industry. I was fortunate to be in the presence of many successfull business owners and I took the positive qualities from each and every one of them and created my own management style. Once I had the experience, I wrote a business plan and formed my own company which I am proud to say has exceeded all my dreams.
On the other hand I watched my friends from high school go to college and receive their degrees in many different fields. The one thing they didn't get from their degree is something I am confident you are only born with. What I am speaking of is common sense, a competitive nature, and a strong desire to succeed. I will take those qualities above any college degree and win every time. I feel the corporate world has mistakenly put more value in a degree than they do experience.
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