Common Mistakes that Entrepreneurs Make when Starting a Business

Did you know that between 50 and 70% of small businesses fail in the first 18 months of activity?

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Did you know that between 50 and 70% of small businesses fail in the first 18 months of activity? Although this percentage varies according to the country, the branch of activity, the period and the polling agency, the reality is not very far from that margin.

The purpose of statistics is not to frighten. The lack of an adequate and realistic business plan is one of the main causes of these failures, according to Shikhar Ghosh, a speaker at Harvard Business School in the United States. Therefore, knowing the common mistakes incurred by new entrepreneurs is a good measure. This way you can avoid misunderstandings of those who have tried before and minimize the chances of failing in your future decisions.

8 common mistakes when starting a business

There are 8 common mistakes that employers make when starting a business, says the consultant of the Brazilian Support Service for Micro and Small Enterprises (Sebrae-RS)

They are:

  1. Lack of capital for the initial investment, including working capital.
  2. Unawareness of the market in which it will act.
  3. Ignorance of the legal and tax responsibilities inherent in the business.
  4. Lack of, or scarce, technical knowledge.
  5. Inaccurate analysis about the place of installation and commercialization.
  6. Little or no marketing planning.
  7. Financial unrest.
  8. Mix of personal accounts with those of the company.

Vera Rita de Mello Ferreira, PhD in Economic Psychology at the PUC-SP, points out that another of the common mistakes is “going behind what is fashionable” without having knowledge of the field in which you are entering, the so-called “herd effect” ” “The first one who opened an ice cream parlor did well. Already the number 59, it is not known: only if it has a very large differential, “he says.

How to deal with common mistakes

Knowing common mistakes is important, but you will not advance if you do not know how to deal with them. According to Feres, before starting a business it is essential that the entrepreneur study what the market demands are and carry out an adequate planning.

“This initial planning is called business plan and it will analyze the market (customers, suppliers and competitors), the necessary structure (physical and personnel) and together with that information, the economic and financial viability of the future business. That is, will it generate revenue? In what time? How much?”

Says the consultant.

After drawing up a business plan, it is vital that the entrepreneur stick to what is planned and invest wisely and correctly, avoiding acting on impulse and “spending more than he should”. In this stage of financial organization, it is also important to evaluate if you will manage the business only or if you will achieve partners and investors.

During the operation

However, it is not only before starting the business that mistakes are made. It is necessary to pay special attention in the first stages that follow the opening of a business so that other common mistakes do not appear.

Feres says that the employer must always aim to have his company recognized as different. “Doing new, remodeled things, or even in an unconventional way, will surely attract the attention of the public,” he says. “The most is always to innovate. The world and the market never changed so quickly. In this way, you must be willing to accompany the speed of change in relation to the market in which you act, “he says.

It is also essential to hear what people have to say about your business, be it customers, suppliers, partners, neighbors or friends. “Hear a lot, process that information and decide to use it – taking into account many of the needs and deficiencies that you identified during the conversations,” advises Feres, while ensuring that it is important to write down everything that is heard and that can contribute to the success of your business.