Do you have an idea that you just can’t wait to make a reality? Have you always had a desire to be your own boss? Is taking risks just as natural to you as brushing your teeth? If you answered yes to these questions, then it is just possible that you are a born entrepreneur. If so, then you have either already started or will be starting your own business in the very near future. Before you do though, review these 10 mistakes that some entrepreneurs make when they first get started so you know what not to do as you travel down the road to entrepreneurship.
- Not doing the research – Invariably those considering entrepreneurship will come up with a great idea and think that just because they thought of it and they think it’s a great idea, then people will want to buy it. This has proven time and time again not to be the case. Conducting market research to test the market and establish that there is a demand for your product or service is a key to starting your business on the right path to success.
- Not having a plan – Would you build a house without blue prints or architectural plans? I think not. Nor should you endeavor to start a business without first thinking about and writing down how you will get started. A business plan, while not all you need to make your business successful, is a key tool in helping to get you started down the right path. The plan should act a guide for you and from time to time may have to be modified as you encounter road blocks.
- Ignoring the competition – This is a key mistake to make for start ups. Some entrepreneurs think that because the competition is not providing a product or service in the exact same manner that they will be, or if they are not located in the same area (remember Bermuda is only 21 miles long) that they have no competition. Wrong. Your competition can be the best way to establish that there is a market for your business. When you are going through the research phase, spend time looking at your competitors. Ask yourself, what do they do right? What are they doing wrong? Are there any opportunities to carve out a niche for your business based on what currently is being offered? You may find that the market is saturated and that there is no room for your idea. Either way, study the competition and learn from them.
- Understanding your limitations – One thing most entrepreneurs have in common is confidence; however, over confidence can have a disastrous effect on your business if it impedes your ability to recognize your limitations. When starting a business look at your strengths and weaknesses and identify key people who can help you balance out the weaknesses. Just because you are an expert baker doesn’t mean you should man the front counter at your bakery if you really don’t particularly like speaking with or interacting with people. If you recognize this as a limitation then you can hire the best front line person you know to make magic with the customers while you bake your heart out.
- Not hiring an accountant/bookkeeper – Most entrepreneurs will have to do it all, but there is one thing that you should not do if you are not good at it – your books. I have seen examples of the difference having a good accountant/ bookkeeper can make. Many times entrepreneurs are good at what they do, but that doesn’t necessarily mean that they can run a business and manage the finances. Budget for this necessary expenses to ensure you start your business off right.
- Not investing in marketing – What is the first thing to go when business gets tough? It’s the marketing budget. This practice while common is not always the right decision. If people don’t know what you do or that you exist, you can’t sell to them. In 2013 entrepreneurs can utilize free marketing in a way that never existed before with the advent of Facebook, Instagram and Twitter; however using social media takes time to work. Ensure that you have a marketing plan and maintain a consistent presence to build a successful business.
- Staring with too little money – Part of the planning process includes looking at the cost to start your business. In the first instance, I encourage entrepreneurs to bootstrap, start the process with what you have until you are able to ascertain that there is a market for what you are selling. At some point you will need more money in order to further develop the business. If this is the case, then please make sure that you get enough money to cover all the start up costs. If you undercapitalize your business (not taking into consideration working capital expenses, equipment purchases) your business could fail before it starts.
- Pricing products wrong – You have started your business and you determined that you are going to price your products below your competition so you can capture market share. This tactic in most cases does not work for most startups because many have overhead and other expenses that more established businesses don’t. Price your products to include the cost of doing business and providing the product and service and ensure that you build in profit.
- Monkey see, monkey do – We have all seen great ideas and thought “why didn’t I think of that”. In Bermuda, especially, we have the benefit of seeing what products and/or services may be available in the US and UK and attempting to adapt a similar version to the Bermuda market. Be cautious though. Just because it works in other jurisdictions doesn’t mean it will work in Bermuda. Keep in mind many overseas models rely on large numbers of people to work when in Bermuda we have a finite number of customers because of the population size.
- Starting and/or expanding to big too fast – You have started your business and made a profit in the first year. A deal to purchase another business comes up and you think the offer is too good to refuse. My advice, refuse it. Especially, if you have just started. Just because you start off profitable doesn’t mean that you will stay that way. In most cases when you start a business you will obtain some sort of financing. Prior to buying or expanding a business, try to ensure that the first business is debt free and profitable first. Don’t let your desire to expand too quickly become the reason your business fails.
Jamillah Lodge is a Business Development Officer for Bermuda Economic Development Corporation. She specializes in providing aspiring and existing entrepreneurs with business development advice and loan guarantee assistance. In addition, she manages the marketing and communications plan for the Corporation and oversees the development of a mentorship and youth entrepreneurship programme. She has a degree in Business Administration with a concentration in Marketing. The opinions expressed in this article are those of the writer and should serve a general guide and should not be considered as replacement advice from a lawyer, accountant or other professional service provider. Readers should consult with the appropriate professionals as necessary.
If you have questions about starting a business in Bermuda, just ask BEDC: Email us at firstname.lastname@example.org or call 292-5570.