It is inevitable that when one starts up a new business, there are going to be mistakes made. And many of those mistakes are done because of a lack of knowledge about what does it take to run a business.
The Hiscox USA Small Business Survey confirmed this idea.
The survey found the top four mistakes in setting a up a business are: underestimating monthly expenses (cited by 32% of respondents); hiring the wrong people (20%); not knowing how to market and sell your product (18%); and not securing enough financing (18%).
As for the things small business owners said they didn't know when starting their company, one-third replied not understanding enough about the impact of taxes, while approximately one-quarter of the respondents said financing and credit and a similar amount said hiring and firing.
"People who take the leap often have great energy and passion for their area of expertise. They have a clear goal, but as they embark on their journey they may not foresee the bumps along the highway. Cash flow, human resources, marketing and insurance issues can seem boring, but are hugely important," said Kevin Kerridge, small business insurance expert from Hiscox USA, which is a specialist insurer.
Meanwhile, a professor at the David Eccles School of Business at the University of Utah, said business people considering new ventures can learn by studying where those who were considered to be "first movers" in the field failed.
Stanislav Dobrev said savvy entrepreneurs benefit from studying first-mover failures. This “vicarious learning” advantage can identify common mistakes first movers make in either over-estimating demand for new services or products, or making fatal errors in gauging the technological challenges facing a new venture.
“A successful strategy is about ‘fit, not functional excellence,’” continued Dobrev. “Entrepreneurs need to resist the temptation to be first to market based solely on a terrific product, an ingenious marketing strategy, or exclusivity in distribution channels. To be a successful ‘second mover’ means having all those things in place and making sure that potential customers, investors and regulatory agencies share some common understanding of what their business is all about.”
