Entrepreneurship is one of the best things an individual can venture into the world today, especially in Nigeria. Google defines entrepreneurship as the activity of setting up a business or businesses and taking up financial risks in the hope of making profits. However, as interesting as being an entrepreneur is, it also requires knowing and avoiding some common mistakes of entrepreneurship.
Most entrepreneurs usually make these mistakes because they believe so much in the dream that logic rarely ever stays at the top of their minds. However, this belief is often destructive as they all fall into issues that may lead to the end of the business in the long run.
This article highlights some of these mistakes of entrepreneurship that negatively affect businesses and could lead to their end. With proper management, rules, and regulations, all entrepreneurs can navigate problems or avoid them completely.
7 Mistakes of Entrepreneurship Common Among Business Owners
Not picking a niche
This is perhaps the first mistake every business owner makes, and it is one of the deadliest mistakes of entrepreneurship. This small business mistake is very quick to kill the enthusiasm of an upcoming entrepreneur in business.
Going into so many things at once can be very overwhelming, especially when those things are not related. This is similar to being the “jack of all trades.”
Not registering your business
Business registration is the most important thing to do when you decide to launch a business. Not doing it is one of the prominent mistakes that entrepreneurs make. Almost all entrepreneurs are guilty of this. You may think that registration is of no use, but in reality, it could prevent many problems for you in the future.
The dangers of not registering your business names are enormous. One common problem associated with this mistake includes someone else registering your business name. This could cause a big problem in the business as your clients and customers might be unable to differentiate between your business and your ‘namesake.’
It automatically means you would have to start the naming process from scratch, which would cost more money, time, and resources.
Unclear business goals and core values
All entrepreneurs have their ideas, goals, and aspirations before venturing into any form of business. These goals and aspirations are always the reasons behind the establishment of businesses. However, it becomes extremely difficult or impossible to fulfil these goals when you don’t structure the business’s operations accordingly. This would also be frustrating to the business owners and could even lead to the business being shut down.
Mixing business with private affairs
This is one of the common mistakes of entrepreneurship among business owners. At the inception of a business, it might be okay to mix the business income and personal income in one account. The business is just new, and maybe there’s no clear difference between the business and personal income and expenses, which is expected.
However, this practice must not go on for too long because if you are not careful, your business may suffer a sudden financial hit beyond your control.
Not executing contracts professionally
This is also another mistake by entrepreneurs as they often believe that they can perform transactions with oral agreements between them and their clients. Most of these practices do not usually end well, especially when dealing with smart and cunning people.
Lack of plan for business expansion
You could say this is one of the hidden mistakes of entrepreneurship because most founders don’t see it until someone points it out. Most small business owners do not have concrete plans to expand their businesses.
This absence of a plan mostly results from fear of not being able to manage the expansion because of the expected additional work. It is, however, achievable when you set your mind to it.
Trying to do the business all alone
Small business owners believe that their business is very small and can handle every part of it themselves. You decide to handle the marketing, production, procurement, and customer service on your own. It might work at the beginning but if you continue like that, you’re subconsciously attracting burnout.
Now that you’ve identified some of the mistakes of entrepreneurship you may have been making, we can discuss how to avoid them. The easy way is to follow the basic rules of entrepreneurship, among others.
How to Avoid Some of the Mistakes of Entrepreneurship
Pick a niche
Picking a niche simply means selecting a particular part of the market for business purposes. Doing this makes you an expert in the business and with this, he or she would be able to know the in and out of the business. It would prevent any unnecessary mistakes in entrepreneurship in the current time or in the future.
Register your business name
This is a common remedy and prevention of the deadly mistakes of entrepreneurship. This remedy is also straightforward but you let experts handle it. Usually, the experts in this field are legal practitioners and maybe chartered accountants as specified by the CAC regulations for the registration of companies and business entities. When you register a business name, there is an assurance of protection over it. With this, the entrepreneur is sure that no other person can use the name as theirs. Registration of the trademark of the business brand is also very advisable.
Execute proper agreements for all transactions
This is a very potent cure for the deadly mistake of oral agreements. When you create professional contracts, it binds both parties by law and there’ll be no reason for actions contrary to what the contract states.
Agreements serve many purposes, one of which is to prevent one party from leaving the other party hanging dry. It also informs both parties of their rights and obligations in a particular transaction.
An example of this type of agreement is a refund policy. It is a kind of one-sided agreement, but when a buyer reads it and continues with the transaction, it means that they have accepted the terms in the refund policy. The client would be bound by the terms of the policy in case of any incident of refund. You should seek the help of an expert if you’re not familiar with refund policies.
Have a proper business structure
This is also a very good way a small business owner can avoid problems in their business. As an entrepreneur, you must put up a solid structure for your business. The business structure includes the process of purchases, sales, marketing, stocking up, customer service, and logistics.
The structure should be clear enough for employees to easily navigate under any circumstance. Structuring your business promotes organization and meticulousness. These qualities will surely help you avoid many common mistakes of entrepreneurship.
Differentiate business from personal affairs
There are so many benefits of having a corporate account. Creating a corporate account for your business gives it a professional look and assures the potential customer of your professionalism. It also simplifies the process of applying for loans from financial institutions and for grants from the government.
Collaborate with people of like minds
There are lots of people with similar ideas and plans to yours. As a business owner, collaborations are very important. With collaborations, you can grow your audience base and ultimately, expand your business. Business growth is an essential part of any business and you should actively involve yourself in functions that promote it.
These mistakes of entrepreneurship are not beyond you. Even the smartest entrepreneurs are guilty of some. The good news is that for every mistake, there’s an effective solution and a preventive measure.
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My name is Olorunsola Omolayo. I am a legal practitioner, chartered accountant, and writer. I am also an Ebook creator who specializes in writing books and blog posts on business topics, especially online businesses.
My leisure activities are writing, seeing movies, and researching.
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