Everyone makes mistakes, and it’s no different for entrepreneurs launching new startups. Getting a little tripped up here and there is natural, but for a new startup, even small business mistakes can become costly down the line.
Upon doing extensive research and interview with new startups and entrepreneurs we have prepared the list of 10 most common mistakes entrepreneurs make that cause their businesses to fail.
And this is across all industries, and not just online businesses or ecommerce.
8 Mistake Entrepreneurs often make which may cause their business to fail
1. Treating your businesses like a Money Vending Machine:
Most people who say that they want to start and build new businesses aren’t actually looking for that at all. Instead, they just want a magical money vending machine, where if they put $500 in, they’ll get $1000 back. But funnily enough, it doesn’t quite work that way.
Here’s how it actually works.
Most businesses take at least 6-12 months to turn a profit.
For those who would say “Twelve months? Really? “Why in universe would it take so long? “I want to make money right now.”
I’m sorry, but that’s extremely unlikely to happen because a business isn’t some ambiguous thing that you do to make money. A successful business is when you do things in a planned and systematic approach. Like-
- Finding or creating great products or services to sell
- Putting or bringing those products in front of the right people
- Giving those people a great reason to buy
There is a learning curve for getting better at these three things and of course it takes some time. There might be some exceptions as some people are genius at doing them naturally, but the majority of us will have to learn it through education and experience.
Now, if you choose to live in a fairy-tale land where you set some unrealistic expectations of overnight success then you can expect a failure rate of 99.9%.
2. Falling for shiny object syndrome:
This mistake is common for every solopreneur or online entrepreneur when first starting out and often leads business to fail.
“I’ve got a great idea. I’m gonna start a print on demand store. It’s gonna be amazing.”
“What’s this? Starting a social media marketing agency? Cool. I’m gonna start one too.”
The problem is that if you fall for shiny object syndrome, then any of your business ventures is certainly going to fail.
Wondering How? Let’s figure out why?
We just need some simple quick math.
You have only got 24 hours in a day. Most of you reading this might be spending at least eight hours at work, one hour commuting and preparing for work.
After taking out seven hours for sleep, that leaves you with just eight hours a day, which is not much time. With those eight hours, some of you have got to cook, help out your friends and family, manage your life, plus, have some rest time as well, so that you don’t burn out.
Most people will realistically be left with one or two hours each day to work on their new business. And obviously, with weekends, you have far more time.
So,on an average, most people are likely to have around 20 to 24 hours of time a week to work on their new business venture.
Now let’s consider this.
You are willing to open an online store where you dropship products in it. Usually, what we have seen is most new store owners devote at least 18 to 24 hours a week on their new business; which is actually less time than other business models because of the fact that dropshipping is semi-automated.
So, if you are trying to start multiple businesses, you will literally run out of time to manage any of them. So, always pick one business model, and stick to it.
3. Thinking that your business is perfect, still customers don’t convert:
I have seen many newbies building their online store with themselves in mind, and that makes it much harder to be objective.
Because most of you, including myself, suffer from illusory superiority, a ‘cognitive bias’ which makes us think that we are superior to others. You may have noticed, almost everyone you meet will say that you are an incredible person and that everyone else is terrible.
Have you ever wondered why everyone thinks like this?
Unfortunately, the Illusory superiority means that it’s actually quite difficult for us to be truly objective about the things that we do and create, which is why we need the help of analytical data. Look for the data and do a detailed analysis of why things are not working. Don’t just do trial and error; online business is all about understanding what the data are speaking to you and taking proper action.
4. Cutting corners at the wrong places in businesses:
This is one of the most common mistakes new entrepreneurs make which put their business in loss. For any successful business you need to follow the system and not cut corners on important things. Many people say: “I have spent more than thousands of dollars on facebook ads and didn’t even get a sale; dropshipping is dead,it’s a waste of time and money”. and more..
But when you visit their store, you will see that they are cutting corners on the important work and wishing for sale.
They neither create unique product descriptions nor have good product pictures. In some cases, their website takes so much time to load that the customer can take a nap meanwhile.
Well, don’t choose to cut corners on basic important things to save time. It can be your biggest mistake.
As an entrepreneur, our goal is to make money, and to do that, we need to do these two things really well.
Marketing and Sales.
For our online store, the product page is literally our pitch to the customer. It’s our job to explain to the customer why they should buy our product, how it will help them, and we have to convince them that they need it.
I know you do need to look for opportunities to cut corners because we all have limited time,
but you should always prioritize your sales and your marketing.
5. Trying to compete on price:
No matter what business you do, no matter your industry, price competition is bad.
Everyone loses in it.
(What is price competition: It’s a price war, when you try to compete with others in your industry on price.)
Don’t try to compete on price. Try to compete for the value you can provide. Differentiate yourself by having an amazing product listing, awesome product photos, fantastic product description, brandable website, etc.
When customers will buy from you, they wouldn’t just buy the product; they buy trust.
So, stop looking at your competitors who are selling items and services for lower prices
and think that you need to price-match them.
Think about other ways to differentiate yourself instead.
6. Underestimating customer’s intelligence:
There was an entrepreneur who had started a new business venture. He had set up an online store selling watches from Aliexpress. Now, on the surface, his store looked like a fancy watch store, with a picture of a businessman in a suit wearing a nice watch. There was just one problem with that though, the prices. He was reselling cheap fake-luxury watches from AliExpress for cheap around 13$-17$. And yet, he was trying to give his store a luxury, professional aesthetic.
But you know what?
It didn’t work, because customers aren’t that stupid.
Just because you mimic a fancy watch store and give your watch a pretentious French name, doesn’t mean customers will fall for it.
Always remember, your customers are smart. Don’t underestimate their intelligence.
7. Afraid to invest and lose money:
Looking for instant returns on their money, “isn’t realistic.”
Don’t hesitate to spend money on yourself, on learning skills, on things which will grow your business. Don’t cry on the money lost on ads, on your store; count on the things you learned and the experience you gained.
I have spent literally thousands of dollars on purchasing products to sell and advertising and traffic campaigns that turned out to be duds.
For me, of course, it was a great investment.
I learnt about my niche inside-out and I became great at driving traffic and generating sales.
But, reaching there was definitely a sacrifice.
It wasn’t like I had lots of money to blow. Yet during that time, I never counted the dollars I spent or lost.
In fact, losing money to make mistakes and learn lessons never bothered me at all.
Most people are obsessed with money. I’m obsessed with time.
Losing money wasn’t scary to me, because I knew that once I was successful, I could make that money back. But that time that I spent stuck at my job?
That was something that I could never get back.
Instead of viewing money as a scarce resource to protect, look at money as simply a tool to help you gain back your time and freedom.
Remember, you can always make back your money, but you can never make back your time.
8. Overthinking of Taxes:
Do you like taxes? Yeah, we know almost no business owner likes thinking about taxes.
Some of you might think this way:
“Working at a job is better than doing business, there I literally did not have to give a single thought about taxes. So if I give up my job and become an entrepreneur, then handling my tax returns will be a new burden.”
But, don’t you think of the freedom you will get in doing a business rather than being chained to the day job and desk. Once you streamline your business and start earning passive income then you don’t have to exchange your time for money. You can fulfill your dreams of traveling around the world in business class and you will no longer have a salary cap on your income.
Build a system and outsource every work. Hire accountants, spend 2-3 days with them in 6 months and make sure that your taxes are in order.
But you know what?
It’s a sacrifice. Are you willing to make it?
These were the pointer that we have experienced people often do wrong.
Do let us know what you think of the pointers, in the comments below.