According to the Australian Bureau of Statistics more than 60 per cent of small businesses in Australia close within the first three years, which is often the result of common mistakes made along the way, writes Damian Blumenkranc, a serial entrepreneur and the communications chair at Entrepreneurs Organisation (EO) Melbourne.
Often the perks of entrepreneurship are glamorised while the hard work and gruelling reality of starting and sustaining a business are overlooked.
As a serial entrepreneur, I’ve experienced first-hand how gratifying building and growing your own business can be. Still, after nearly thirty years of success and business failure, I also know that being an entrepreneur comes with many challenges.
I started my first business at 15 years old and have built and grown countless businesses, from a leading Australian video & animation production studio to a mobile permanent hair removal operation and countless others in between. Scaling and selling businesses has always been a passion and something I grew up with. My father was also an entrepreneur, and the wins, losses, challenges, and success of owning a business were frequent and open topics of conversation in my household. Even with my father’s valuable experience, I’ve still learned the hard way the impact of a simple mistake.
Making mistakes is an important part of entrepreneurship.
It’s part of learning how to run a business. However, it’s having a deep understanding and the ability to forecast these mistakes early on, that determines which companies can sidestep challenges and which will become another statistic.
Scaling too fast
Launching your business and watching the clients come in is one of the most exciting parts of being an entrepreneur, but this is where many entrepreneurs can run into problems. Unless you focus on growing sustainably, you run the risk of losing your business.
Revenue and cash flow, which are significant components in sustaining a venture, have always been elements that I have held to the highest importance. For me, generating not enough revenue is equivalent to failure, and that scares me. However, chasing revenue without keeping costs under control can be even more dangerous.
Not finding a strong support network
I opened my second business when I relocated to Australia from Argentina. Not only was this a culture shock, but it was also a huge learning curve. Most helpful to my professional and personal development as a startup founder was finding a support group I can trust. I have tried a range of entrepreneur, professional, networking groups as well as business coaches, and learnt a variety of skills from each of those exercises however the place I found where I found the right balance and I feel at home is EO Melbourne.
Through EO, I have picked a lot of knowledge, a lot of nuggets, and some really good fun. It’s mostly about inspiration to me. Going to these events, you get that one little thing that inspires you, that re-ignites you, that 1% you can change and make everything better.
Micromanaging teams / trying to maintain too much control
As an entrepreneur, your business is often your ‘baby’. You have invested a huge amount of time and money into it so it’s hard to let go of control when you decide the time has come to hire a team.
Sometimes this leads entrepreneurs to micromanage teams or try to maintain too much control. Both are hard habits to break. Because you’re attached to the business, you still have many concerns that you have to work around with. You’re also the one who sets examples and creates a culture because whatever you are doing, you can expect people to follow it as well. I use an each-end approach when hiring people, from one side I hire those that can take over my repetitive tasks that I can easily delegate and monitor, and from the other end I try to hire people that have the knowledge and experience to support me on the areas I am not strong at. This way I get more time to focus on what is important and get the expertise I lack to grow the business.
Not paying close enough attention to numbers
Entrepreneurs and those with a big vision need to also pay close attention to numbers. A business can be turning over a significant amount of money but if a significant amount isn’t profit, you’ve essentially bought yourself a job.
I’ve always made sure to have some extra financial padding if a big deal doesn’t come through, an investor says no, a letter of offer gets rejected, or a staff member has not been as committed as we’d like. There are always going to be setbacks; Ensure you are ready for them when they come.
Failing to focus on their core offering
Once you’ve launched and your business has begun experiencing some growth, it’s natural to start scaling your business or feeling the urge to add more offerings to your packages. It’s often part and parcel of being passionate about what you do. A lot of entrepreneurs succumb to ‘shiny object syndrome’ chasing the next big idea instead of focusing on the core of their business and their purpose. As an entrepreneur, I always focus on our purpose and what made our customers come to us in the first place.
Not listening to customers
While having a goal is vital at the very beginning of everyone’s entrepreneurial track, it takes more than that to carry on with the entrepreneurial voyage.
Start by listening. That’s the one thing everyone should do. Start listening to clients, to markets and people; that’s how you can align yourself with them to understand them.
Trying to do everything themselves
Many entrepreneurs make the mistake of trying to do everything themselves. At the beginning you may need to do a lot of things yourself while bootstrapping, but the goal should be to quickly grow to a point where you can outsource anything that isn’t your core skillset.
Particularly as a business owner in a foreign country, I found solace in networking with other business owners who could share which services they outsourced and how that supported them. Your peers are usually the best people to ask, as they have the relevant and recent experience that you can action to grow your business.
Invest in marketing, wisely.
Another mistake many entrepreneurs make is to either spent too little in marketing or too much on unproven marketing. Here is where I use the aim with bullets before throwing a cannonball approach. The idea behind this is to find ways to try the different marketing options available and to test them with small budgets that you can compare and then scale as you start seeing the right ROI balance.
Hiring the wrong people
Early into my business, I made the miscalculation of hiring the wrong people. We were hiring too fast and firing too slow. My company is people-intensive; thus, having the right persons in the team is crucial to my projects’ success.
What I learned was how to make the critical decision of letting go of the wrong people when things don’t work out. One underperforming or unhappy employee can quickly sour your company culture. KNOW WHO TO FIRE AND DO IT FAST.
Failing to set SMART goals and realistic projections
Failings have taught me many lessons that have enabled me to evaluate my actions and mistakes and see where I could still improve on. Instead of looking at setbacks, I prefer to look at what’s ahead of me and focus on it.
You must have a very clear and realistic vision of where are you going because that guides everyone else on the journey.
Being an entrepreneur is never an easy path to take, but the rewards are tremendous when you’ve put in the work. The freedom and flexibility, independence and pride in bringing an idea to fruition and seeing it succeed – there are few feelings quite like it.
The benefits of having a strong peer network around you like Entrepreneurs’ Organisation, mean learning from those who have walked the path before you and being able to navigate the inevitable challenges with others wisdom and lessons.
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