According to the Bureau of Labor & Statistics, entrepreneurship plays a vital role in growing the U.S. economy. However, inevitably, some establishments will likely fail. The U.S. Small Business Association describes an entrepreneur as a person who “organizes and manages a business undertaking, assuming the risk for the sake of profit.” Some entrepreneurs are aware of the risks involved in starting a new business. However, a good percentage does not completely understand exactly what it takes to create a successful venture.
Experience is arguably the best teacher. Learning from the success and failures of others comes in a close second. Dana Brownlee is an entrepreneur with a decade of experience in running her own business and consulting for companies and corporations. Ms. Brownlee is the president of Atlanta-based Professionalism Matters. She is a well-known speaker, corporate trainer and team development consultant. In a recent feature at Fox Business, Ms. Brownlee shared her opinions on the subject of mistakes entrepreneurs make. This article addresses her observations and how entrepreneurs can work on developing better habits that lead to success.
Lessons Learned from Entrepreneur Dana Brownlee
Mistake # 1: Not Reserving Enough Cash to Personally Fund Your Own Expenses
Ms. Brownlee shared that one of the main reasons small businesses fail during their first few years is because they don’t have enough cash in their reserves. During the beginning, they simply run out of money. They may have the best business model and be a good entrepreneur, but they have not prepared enough for the inevitable highs and lows of the new journey.
- Tip: Be a good steward and get proactive. Set up a special fund filled with enough cash in reserve. This fund should be able to carry you through the first few years. If you take from the fund, replenish it.
Mistake # 2: Making Overly Optimistic Assumptions in Your Business Plan
As a business consultant, Ms. Brownlee has seen many new entrepreneurs fall into the trap of over-simplifying the entrepreneurial process for their business. Such entrepreneurs usually spill over with excitement. They share their idea with friends and family and try to convince everyone that their venture will succeed with no issues. Usually, it’s not too long before these newbie entrepreneurs realize that they made overly optimistic assumptions and not enough careful planning.
- Tip: Be honest with your situation and find several objective individuals who are not friends or family. These people should act as sounding boards to assist you in recognizing liabilities and take steps to deal with them.
Mistake # 3: Improperly Evaluating Your Business Model
Ms. Brownlee shared that some new entrepreneurs jump right into their venture without much planning beforehand. Getting excited about your great idea can be somewhat of a stumbling block unless you learn how to plan and incorporate a specific business model. Even if you have the best idea in the world that does not necessarily mean your venture will succeed. As an entrepreneur, you need to remain objective and prepare for anything.
- Tip: The best option for creating a business model for the newbie entrepreneur is to contact your local Score office and work with an advisor to create a business plan for your venture. Working with such a counselor—is free—and is a valuable resource to help you identify liabilities and work on possible solutions.
Mistake # 4: Having the I-Need-to-do-it-All Attitude
During her ten years as a business consultant, Ms. Brownlee has seen countless new entrepreneurs try to make things happen all on their own. She claims that if entrepreneurs try to do everything themselves, they’ll only succeed in burning out and failing in their business. There is a difference between the work you need to personally complete and the work that can be farmed out to others in your business and outside consultants. Be smart about which business activities you invest the most time in. Some of those activities include: developing and refining your products and services and cultivating industry relationships. Some areas you may want to outsource: website design, marketing and various administrative tasks.
- Tip: Ascertain which activities are important for you to handle and which ones you need to delegate or outsource. Ask yourself some questions to help you decide. Is it an area where you have little expertise? Is this part of the core know-how of your business? Is it too time consuming? Can this project be outsourced at a reasonable cost?
Mistake # 5: Failing to Give 100% Effort During the Early Years
The following fact from Ms. Brownlee’s Fox Business feature astounded me as much as it amazed her. She’d run into many new entrepreneurs who were shocked that shortly after launching their business they weren’t making six figures. The most shocking part—they expected to make such money while only working a 25 hour work week. Being a successful entrepreneur is not about glamour and a high profile lifestyle. That may come in time. However, it only happens with a great deal of blood, sweat and tears during the early years of the venture.
- Tip: Take time to realistically evaluate your lifestyle before jumping into a new venture. Assess your perspective on whether or not you truly understand that in the beginning you will have to work extremely hard to succeed.
Mistake # 6: Not Understanding the Best Price for Your Products or Services
According to Ms. Brownlee, many new entrepreneurs either price their products and services too high or too low. She makes this assertion due to her experience in writing proposals for government agencies. For four years, she had consistently received rejections. Then a colleague advised her that her pricing was rather low and in order to be considered a serious candidate, she needed to raise her pricing. After doubling her pricing, she then was selected for the first time. However, use common sense and don’t overcharge either.
- Tip: Research and do a price comparison for others in the same market. Ms. Brownlee advises new entrepreneurs to “offer value pricing initially, prove your value and then raise prices over time.” First ask a client what their budget is and then give them a proposal of what services you can provide within their budget.
Mistake # 7 Failing to Create a Growth Strategy
Many new entrepreneurs make the mistake of thinking the goal is to get as much business as possible right away. However, Ms. Brownlee found that sometimes attracting too much business from the start, can “threaten the longer term viability of the business completely.” For example, if you receive too many clients immediately and cannot keep up with the work flow, you’ll only be ruining your reputation and not be able to retain your clientele.
- Tip: Discuss your business growth strategy with the Score advisor and develop the best strategy which can guide you as your business develops.
Ms. Brownlee’s business experience has been extremely valuable to me as a newbie entrepreneur. If you pay careful attention to the seven mistakes she warns against, you will have a greater probability of success in your entrepreneurial business ventures.
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