Founder and CEO of ERG companies. Nationally recognized thought leader in the fields of entrepreneurship, investing and leadership.
One in five companies just starting out will go bankrupt in the next 24 months, it reads data of the Bureau of Labor Statistics. When it comes to security, entrepreneurship doesn’t pay off much.
For us entrepreneurs, we are taught what to do to bring our idea to fruition. Develop a business plan. Working on our field. Get financing. Go from A to B to C.
But school and the internet won’t teach us about the mistakes we can’t afford to make as entrepreneurs – the things we shouldn’t do that limit our chances of success, not only for our current venture, but also for our career as a business builder. .
So if you want to start a business, this article is worth it. In it I share the five biggest mistakes I see new founders make. Avoid them and you will increase your chances of success. Let’s dive in.
Mistake No. 1: Believing you can do it yourself
When I built my first business, I relied on a lot of people. Mentors, investors, partners, employees – the list goes on. I learned that entrepreneurship is as much a social discipline as it is an intellectual one. That led me to devote a chapter in my first book to a common but misguided mindset I see in new and aspiring founders. It supports the belief that we can only build profitable businesses through our individual genius.
I’ve come across hundreds of founders who fit this category who have pitched my private investment company, ERG Enterprises. And they’ve all left our offices without funding. Why? Because companies don’t stand on the shoulders of one. They grow through the investment of many. Companies need financial capital to accelerate growth. But much more important is the human variant: knowledge, talent and creativity.
Believing you can start and grow a successful business all by yourself is an exercise in vanity, not the science of entrepreneurship. Entrepreneurship is ultimately about embracing the wenot the me.
Mistake No. 2: Starting a business outside of your expertise
Take an MBA program and you’re bound to hear this advice: “Stick to your field.” If I had chosen business administration instead of medicine, my career might have turned out very differently. I probably would have remained a hand surgeon only.
That said, this advice applies in a very specific context: when setting up your first business. Then we have the assignment to learn the trade of entrepreneurship. We need every advantage we can get, which is why we need to make it easiest for ourselves – and that’s by sticking to what we know.
Mistake No. 3: Finding the Wrong Partners
Co-founders are an important aspect of most startup companies. I’ve never owned one, but I’ve invested in plenty of startups that have, and they’ve seen clear success in the end. I also invested in many that failed. I’ve noticed that the biggest difference between the former and the latter is the marriage between the co-founders. The failed combinations were never aligned with their long-term vision for their companies, while the opposite was true for the companies that fit into the successful category. The takeaway: Be careful when choosing a partner. As with any marriage, you need to understand their goals and aspirations and make sure they match yours before committing to a relationship. That includes their desired role and outcome of starting a business.
Mistake No. 4: Creating the wrong expectations
I believe that entrepreneurship is the most rewarding profession. I think it is also by far the most challenging. The role doesn’t mean you automatically step into an exciting lifestyle that commands excitement, wealth and respect. In fact, it’s just the opposite. At least in the early stages, you work harder for less money than a full-time job. You sign up for sleepless nights, periods of self-doubt, and moments of intense pressure, often lasting for years with no guarantee of reaching your intended destination. The rewards of being an entrepreneur can be great, but they can also be disappointing.
So it is important to understand and fully acknowledge the realities of the profession before applying for it. That means confronting the common misconceptions, such as that you will have more free time, be your own boss, get rich quick, and set the right expectations. By acknowledging the harsh realities of the profession, you give yourself the best chance of success.
Mistake No. 5: Focusing on more than one idea at a time
We have all met the person with numerous ideas for starting a business. Every day inspires a new product or company. One company revolves around the other, revolves around the other, and so on. These transitions occur whenever the founder faces the inevitable resistance that all entrepreneurs face. Brilliant ideas are sexy and inspiring until reality reveals their flaws – the point where the hard work really begins. As this cycle continues, the founder is wasting precious time, energy and capital without any measurable progress, in terms of the company itself and the crucial skills and knowledge to build a company from the ground up.
I believe that entrepreneurs who start a business should see it through to an exit. That could mean selling it, making an acquisition, or going bankrupt. Each path offers important lessons for the entrepreneur that will benefit their careers in the long run. By switching from idea to idea, however, you are selling yourself short by never gaining the experience that can benefit your future.
Increase your chances of success
Like any successful entrepreneur, I have made countless mistakes. That’s the reality of a profession with no guardrails and a clear path for progress. But not all mistakes are created equal. The mistakes explored in this article limit your chances of success as an entrepreneur. They are also completely avoidable.
By avoiding them, you can increase the likelihood of building a successful business and see a return on your time, effort, and sacrifice. You don’t have to make it harder for yourself. The statistics show that the profession is already hard enough. You must take advantage of every advantage.