Common Mistakes Entrepreneurs Make

Not Experimenting

It’s nearly impossible to predict what’s going to be successful which is why most ideas and products don’t work out. From Pepsi Clear to McDonald’s Pizza, the world is filled with failed concepts and ideas. This is why it’s important to experiment with different ideas so that you can determine which ones are the best before spending too much money or time on any one idea to recover from if it doesn’t pan out.


Spending Too Quickly

It’s impossible for me to count the number of businesses which have spent large sums of money on things they didn’t need, before they needed them, or which they could have gotten cheaper. When you start a business, you should take it slow and rework your strategy and tactics a number of times to find out what you absolutely have to spend money on. Be creative in finding ways to cut your budget. Use Just-in-Time processes, lease products, buy used products, externally source tasks to avoid large purchases and improve efficiency, or do more internally to avoid large fees, and make deals with other businesses, etc.



Not Researching

While it’s true that research can’t tell you everything, there are a number of things you can only know from research. Some customer preferences are best arrived at through research, your potential market size, which promotional efforts are working, and more can only be learned through research. It’s true that you might discover there aren’t enough customers for what you’re planning to sell in a given area, or that your business is not viable in general, but it’s better to learn these things early so you can find ways of gaining additional customers or getting customers to spend more money before you’ve lost money promoting to a group that’s too small for you to earn you a profit on.


Setting Prices Too Low

Out of dozens of entrepreneurs I’ve met with, very few have priced their products too high, but almost all of them set their prices too low. Remember, you can always offer coupons, discount cards, specials, or simply drop your prices without chasing away customers. However, it can be tricky raising your prices. So it’s better to find out that you’re charging too much for what you’re doing than too little.


Not Having a Strong Brand

A brand is your most valuable asset or your biggest detriment. At one time some businesses squeaked by without a strong brand by being the only option of their kind in a community, but with the rise of the category killers and department stores, that is less likely to be possible. Without a strong brand of some sort, a business that does have a strong brand will outsell yours.


Not Planning Product Selection

You can’t fit everything into your store, your service schedule, or your invention cue. You must be picky about the products you carry, and you need to have a plan for how you’ll select one product over another. Remember, every product you carry represents hundreds if not thousands of other products you’re not carrying that someone might want to purchase. With that in mind, you need to choose what product mix will make you the most money not the product mix that avoids leaving someone out.


Not Promoting Properly

If you build it, most people won’t hear about it much less bother showing up. Most business owners can tell you innumerable stories in which a new customer has been completely shocked when they “discover” the entrepreneur’s business has been on their way to work, by their house, or selling just the product they’ve needed for years. The truth is that the majority of people don’t talk about businesses very often. What’s more, research has shown that most word-of-mouth originates because of promotions in which people are reminded to talk about the business or in which the people who do talk about the business first learned about it through a promotion of some type.


Not Tracking Cash Flow

You can’t know if you’re going to succeed if you don’t know how much you’re going to earn. By the same token, you won’t know what’s working unless you keep track of how much money different tactics and products earn you.


Not Collecting Data

Knowing who your best customers are and why they choose your store is the best way to determine who you’re not reaching and who is most likely to shop at your store. Far too many businesses just assume they know these things without any evidence to back up their claims. We all suffer from assumptions on who our customers are which aren’t true.


Not Planning Target Audience

You’re not going to tell everyone in the world about your store with an ad budget of just $10,000. Nor is there a product in the world that everyone buys. The closest things to general products in the world would be Microsoft Windows and Coke because of the number of customers they each have. Yet even they struggle to sell to even half the population, spending billions of dollars to execute their strategies.

Choosing a target, then, is not just about saying that a certain group won’t like your product. It’s about realizing that you can’t reach everyone so you need to reach those people who are the most likely to buy your products.



Having a Rigid Strategy

The world is not a rigid place, and it’s growing less rigid as time goes on. Customer tastes change, the economy changes, people move, technology advances, new companies form and change, etc. Even in an unchanged world, people find out that they were simply wrong. Coke gave up on New Coke, Google has failed to earn a profit on more products than you could count on two hands, and McDonald’s Pizza no longer exists. The truth is that 80 per cent of new products fail. So while you should try to avoid failure, you also need to accept it and adjust your strategy accordingly.


Failing to Maintain Quality

Quality is of increasing importance now that word of mouth can actually spread. While most people won’t tell other people if they had a good experience, they will say something when they’ve had a bad one. Because of this you only have to fail to maintain quality a few times to earn a bad reputation. Quality in business doesn’t come from the use of expensive materials; it comes from predictability. When people buy anything, whether high or low cost, they have certain expectations of it based on its price and your brand. Meeting or exceeding those expectations is what makes a quality product or experience.


Failing to Develop a Strong Brand

A brand is your most valuable asset because people buy brands, not products, which is why most industries have only a few companies which earn over half the money in that industry while thousands of others take less than half even though they all sell the same products.

A good brand can help you attract more customers or sell for higher prices. Tiffany’s can sell its diamond rings for more than most competitors even though it buys the diamonds from the same sources because of its brand. In the modern competitive environment, if you don’t develop a brand, people will purchase from someone who does.

Thinking That the Product, Event, or Sale is a Promotion

If no one knows you exist, the solution isn’t simply to roll out more products, host an event, or have a sale because people still have to find out about these things in order for you to be successful. A product, event, or sale, rather, is something that may be easier to promote.


Relying on Word of Mouth

It bears repeating that word of mouth is not a plan. Word of mouth is something you make plans to get. For this reason its best to think of word of mouth as another product that you need to develop. It’s a product which you are encouraging others to make rather than one you’re making yourself. So it’s the product over which you have the least amount of control. This means that obtaining word of mouth requires its own comprehensive plan. You can’t assume people will talk about you because they like what you sell or because you’re friendly.


Not Communicating the Reason People Should Buy From You

Wharton found in its research that the message is the most important part of a successful marketing campaign. Everyone knows about hundreds if not thousands of products and retailers they aren’t customers of. No one can buy or shop everywhere because even if they have the money, they don’t have the time. You need to communicate to people why they should buy from you rather then someone else.