Business Success: Avoiding Common Mistakes

A guide to navigating the first years of your venture.

The Hard Truth About Business Failure

You are all here for this reason: you want to start your own business. Let’s be realistic. More than 20% of new businesses fail during the first two years, 45% during the first five years, and 65% during the first decade. According to one survey, only 25% of companies last 15 years or longer. These are some terrifying numbers! One of the best ways to succeed is to learn how to avoid the things that cause a business to fail. This presentation will introduce some of the common mistakes businesses make that cause them to fail. Knowing the mistakes might actually help you avoid them.

Mistake #1: Money Matters

It’s not surprising that one of the biggest reasons companies fail is money. Money is not a gray area. There are clear guidelines to follow. You don’t want to start your business without enough money to run your company until you have customers buying your products. Don’t lose control of your finances. Once the money is gone, you won’t be able to pay your employees or afford any of your expenses. You don’t want anyone to live with unemployment. Try to think of all the expenses there will be. Plan on them being double—or even triple—what you expect. Consider waiting to start your business until after you have funding or savings. Money does matter!

Mistake #2: Insufficient Research

Another reason companies fail is that they did not do enough research. If you want to open a business that sells flowers, but you open it in a town where there are three other businesses that sell flowers ... Well, your business isn’t likely to do well You won’t make enough sales. Make sure you do some research first. While there are some changes that come out of the blue, a lot of things can be planned in advance if you know your audience and prepare. Write a paragraph that indicates what your company policies are and specifies your customer base. This will help you stay focused.

Mistake #3: Growing Too Quickly

Be careful about growing too quickly. Sometimes you’ll start making money right away. That can be really good. But if you start expanding too fast—perhaps you move to a bigger building before you’re ready, or you try building more products than you have sales for—then you could risk going out of business before your first annual report. It’s important to build your business slowly and steadily.

Think about a business like Blockbuster. Blockbuster started in in the 1980s. It was once the world’s biggest chain of video rental stores. Be aware of your market. The market is always evolving. For Blockbuster, the company grew too fast, and then it ran out of money and the industry changed. No one rented videos anymore. Blockbuster’s business plan needed a revision. It ended up closing almost all its stores. Now there is only one store left in the world. In Oregon in the United States. Companies like Netflix and Redbox developed better business models. Make sure that you adjust your business plan as you grow. Slow and steady wins the race.

Mistake #4: Poor Hiring Decisions

The people you hire are also important. A lot of people want to start a business with their friends. One thing I’ve learned is that friendship is not a good foundation for a business. You need people on your team that have both experience of practical business techniques and good academic knowledge. Smart business owners hire managers for the things they don’t do well. For example, perhaps you are a great owner because you created a product. But maybe you’re not always an efficient worker. Maybe you’re not great at managing time or schedules. Then you’ll want to hire someone who is a good project manager. Allow yourself to ask for help. You don’t need to do everything on your own. If a company cares about hiring the right people, then each of those workers care about the customers, and this results in company success.

Conclusion: Your Journey to Success

A successful business is a wonderful achievement. Try your best to avoid the mistakes and hopefully I will someday be one of your customers. And, you never know—your small company may be the next big company! Good luck!

Test Your Knowledge!