A great product or service doesn’t always turn into a great business. As an entrepreneur and founder of Everest Business Funding, Scott Crockett explains, entrepreneurs who make poor decisions can completely derail what could’ve been a very profitable business.
There are common strategic mistakes that many entrepreneurs make as they try to build a business that ultimately results in a failed effort. Here are five of those common errors every entrepreneur needs to understand so they can avoid.
Mistake #1. Not Having a Handle on Finances
Most new businesses fail because they aren’t sufficiently funded. Not having enough money to take the company from concept to creation isn’t the only financial mistake entrepreneurs make, though.
Many spend too much money at the outset, initiating big marketing plans that involve huge advertising and outreach campaigns. They swing for the fences early and end up going down in flames.
It’s also easy to focus too much on sales and forget about cash flow. Remember that revenue is excellent, but cash keeps the lights on. Sales are nice, but without collections, your business will have trouble sustaining itself.
Mistake #2. Not Clearly-Defining Customers
Every business needs marketing to get its message out. This doesn’t necessarily mean you have to spend a lot of money to do so. It does mean that your marketing messages need to be efficient if you want them to be effective.
The great part about marketing today is that it can be done online for a low cost. This is especially important for newer businesses trying to get off the ground.
But, if you haven’t clearly defined your customers, you won’t reach them effectively. Marketing success comes from being able to target your prime customers. That all starts with creating a narrowly-defined customer bucket.
Mistake #3. Not Having a Strategy
Every company needs a well-thought-out business plan that guides all who are involved toward common goals. Entrepreneurs too often try to “fly by the seat of their pants” because they believe it keeps the company nimble.
That approach may work for single-person operations, but it will probably hold back the company from growing. Create a business plan for where you want to go, and design a blueprint for how you’re going to get there.
This plan will serve as a roadmap for employees you hire as they help you execute the goals. It’ll also serve as a constant reference point as you progress.
Mistake #4. Not Hiring the Right People
Employees make up a large percentage of a business’ cost. When you make the right hiring decisions, you’ll be rewarded with an exceptional return on investment. When you make the wrong hiring decisions, it can be catastrophic to your business’ success.
As Scott Crockett points out, many entrepreneurs hire based on cost — or hold off on hiring in slower times. This is never a good idea. Attracting and retaining top talent is the key to any company’s success, no matter what industry they’re in.
Mistake #5. Not Delegating
A similar mistake that entrepreneurs make is they don’t hire enough employees or refuse to hand off specific tasks because they have trouble delegating. You can’t do it all, even if you’re the person who knows your company best.
If you want to grow your business, you’re going to need people to help you. And if you try to retain control of every little task, you’ll be impeding your company’s growth rather than supporting it.
About Scott Crockett
Scott Crockett is the founder and CEO of Everest Business Funding. He is a seasoned professional with 20 years of experience in the finance industry. Mr. Crockett’s track record includes raising more than $250 million in capital and creating thousands of jobs. Scott has founded, built, and managed several finance companies in the consumer and commercial finance sectors.