7 costly business mistakes to AVOID to make it past the first year.
Hi there! Last year was a significant year for me. It was full of surprises, changes, and uncertainties. I was layoff in January after finishing my maternity leave. Immediately after I had the news, I started applying` for jobs.
However, little did I know that an engineer’s hiring process was so tedious and so long. I need it to start making money fast. So I decided to go into business for myself and made many business mistakes along the way.
According to Fundera, 20% of small businesses fail in their first year, 30% of small businesses fail in their second year, and 50% of small businesses fail after five years in business. Finally, 70% of small business owners fail in their 10th year in business.
Despite those horrible statistics, I ventured to start a business. Believing I could be part of the percentage that makes it gave me fuel to star and kept me going.
I will give you a head started so you don’t make the same mistakes I made.
Let’s dive right into it!!
1) Thinking you can make money right away.
It takes time to see any money rolling in, so make sure you are not against the wall concerning your cash; otherwise, you will be in trouble, especially if you are opening a brick and mortar business, where you have to make significant investment upfront. It will take time to recover your investment and start making money, that is, if you make any money at all.
I decided to open a restaurant. Why a restaurant? Well, I always wanted to. Cooking is one of my passion, and I thought I could do well.
2) Not having experience in the industry you are entering
Don’t enter an industry without any experience if you are running against the clock to make money or do not have sufficient funds to support your mistakes. It will cost you greatly if you make this business mistake.
On top of that, you might find out the hard way that just because you are passionate about something doesn’t warranty success; rather, you might end up like me, hating cooking.
Then it was time to find a location. The thing I did right, at first, was starting small. I had the idea of buying a hotdog stand and renting a location to put it during the summertime.
Buying the stand was easy; finding the location was not. I was determined to start running as soon as people start coming to the beach, so I keep looking. My location search ended with me taking a second location and opening a food kiosk on top of the hotdog stand.
3) Going too big from the beginning.
Don’t bite off more than you can chew 😜(huge business mistake); instead, start small, learn the trade, and expand progressively.
Everybody kept telling me that the beach was so crowded that it was so hard to find parking. That businesses thrive in summer and that I was going to make a killing. Everything sounded so exciting !! I was sure nothing could go wrong.
Being optimistic is ok. You need to see beyond the uncertainty that opening a business is; however, way too much optimism can harm you, especially when you base your decision on someone’s else opinion and haven’t done the right research to back up your steps.
4) Not doing market research
This business mistake hit me hard even though I had heard it a thousand times; you have to test the market, research, and see how it behaves. In my case, I should have known that not all kinds of food are good for selling on the beach, and just because a particular item does well somewhere else doesn’t mean it will do well in your market.
You have to consider competition; if I had made my market research, I would have known that there were other businesses selling hotdogs and that another hotdog stand wasn’t needed it. I would have come up with something different instead.
5) Expending unnecessarily upfront.
Opening a restaurant entails a lot of expenses, and you have to keep those low. In general, you should spend as little as possible until you start making money from the business. That now, I know.
Expending way too much before the business is making any money, assuming you will get it back, you should avoid this costly business mistake. The more you expend, the more it will take for your business to start being profitable.
I bought coffee makers, boxes of disposable paper cups, cream, and containers that are still sitting in my garage. The best practice is to test the idea first, and if it works, then you buy whatever it is that you need and keep the expenses low.
6) Playing it safe by imitating the competition.
I opened both locations as planned, on time for the first tourist to arrive at the beach. My set up was simple enough to sell pizzas and sandwiches. Did you see the next mistake here? Pizzas and sandwiches aren’t those so generic and boring! Couldn’t I come up with something more unique and attractive? You bet I could.
Don’t be a cookie-cutter. I played it safe and thought that that’s what people want it. I was wrong again.
Fortunately, I had time to correct that mistake, and I moved fast when I noticed people weren’t responding as I wanted to my menu. As soon as I found my voice and started showcasing my style, things changed around.
So take that from my experience, be yourself, and don’t be afraid to shine. People will see your value and will reward you for it.
It felt so good when a client came to tell me how good my food was or how far they have come from just to have my salsa. That was amazing. !!
7) Thinking short term
My last business mistake was to open a seasonal business. If I had had a couple more months, I could have done so well; instead, my summer ended with a bitter, sour taste. I have gotten used to the routine, everything was going well, and it just ended. Don’t make this business mistake.
Don’t open a business expecting short term gains. If you commit to something long enough, you will see results. You learn to sort through the problems and look for solutions, you become resourceful, but that’s only if you commit the time to learn and grow.
It was a great summer for me. I learn a great deal, especially from my business mistakes ;). Even though it wasn’t a financial success, I would definitely do it again. Opening those businesses led to other experiences and connections.
Even failure is part of the success pathway; after that, I am one step closer to the good things that are to come. I now know that a restaurant is not something I want to do. But I only know it because I tried it; otherwise, I would have always wondered what would have happened if I had done it. Guess what? I did it.
I hope you have learned something from this journey and are better armed for your next undertaking in the business world. Just don’t be afraid of making mistakes. It is better to make them than never to start.
Now have you ever thought of opening your own restaurant? Let me know
Originally published at https://clickforgrowth.com on September 12, 2020.