Being an entrepreneur is hard. With eight out of ten businesses failing in the first five years, the odds are against you creating a successful and profitable business over the long term. As a young entrepreneur, these issues are compounded by the perceived lack of knowledge and skill associated with your youth. To help increase your chances of success in your new venture, here are a few common mistakes young entrepreneurs should avoid when starting a business.
1. Not Properly Knowing Your Industry
In most cases, as a young entrepreneur, you’re entering an already established industry. You need to be knowledgeable about your industry to have any chance of success. Study other professionals and businesses in your field. Learn, not just from their success, but their failures as well. Know, understand and follow any rules, regulations and best practices specific to your industry. Don’t let ignorance be your failure.
2. Failure to Prioritize Sales
Your principal focus should be sales. The ability to sell will determine the success of your venture. Cash flow is more important than turning a profit. Prioritize work that will increase your bottom line. Tasks which increase sales are marketing, customer support and prioritizing upsells and cross-sells.
3. Starting Without Enough Capital
It will take longer than you think to earn a profit. If you’re not selling, your business is not going to survive without reserve capital. Every venture has difficult sales periods when revenue is lacking. Proper capitalization is key to making it through such periods.
Determine the profitability of each unit or service sold. Use that information to calculate the revenue needed to fund your business. You can then judge how much money you’ll need to make it through that first year of business.
As a young entrepreneur, you will face many challenges. You will succeed with persistence and a strategy to overcome any obstacles you face. Stay informed and diligent, and you will not fail.