Which of the following helps an entrepreneur avoid the pitfall of not having realistic goals?

Entrepreneurship is like an uncharted journey. 

A journey where even with a solid strategy, you appear uncertain as you don’t know what lies ahead.

As an entrepreneur, you might encounter a handful of problems along the path as you try to establish your startup and gain a strong foothold in the market, it always helps to prepare for the pitfalls and challenges ahead.

As they say, ‘It always helps to be prepared for the worst.’

So, what are the common pitfalls entrepreneurs should look out for while starting a new venture. Here is the list based on my 12+ years of entrepreneurial career:

Burning Cash Fast

Running out of cash is one of the primary reasons why startups fail (Source: CBInsights), which is true even among businesses that start with a sizable investment. When you have adequate cash in hand, it’s easier to lose sight of priorities and spend on things that neither add a lot of value to your business nor generate revenue in return. Think of all the decorative elements you purchase to beautify the office just because you can afford it. 

Faster burn rates happen when you don’t generate enough revenue as projected, but your expenses are scaling high. Sooner, you will realize you have limited cash to spend on essential aspects. Without finds, your business will be unable to continue for long. 

What you can do to avoid the pitfall:

• Have a solid plan outlining your expenses and means of financing them
• Prioritize your expenses based on their impact on the business
• Cut-back on unnecessary purchases and buy/rent second-hand tools whenever possible

Downgrading the Importance of Marketing

If you are under the illusion that your product/service will sell itself with a minimum marketing level, you are about to face a significant pitfall. Your business idea may be unique, but unless you carefully curate the “need for it” through compelling marketing materials, it won’t go very far. Waiting for customers to notice you don’t work in this fiercely competitive business world.

Creative marketing strategies are also crucial for small firms to compete against their large counterparts effectively. So, every entrepreneur must consider marketing seriously to gain visibility and boost sales.

What you can do:

• Spread the word about your business in the targeted market with persuasive marketing pitches. 
• Focus on digital marketing strategies such as SEO to maintain the right online presence as it’s one of the critical steps to take a business online.
• Allocate an adequate amount to invest in effective marketing channels.
  

Neglecting Customer Experience

Many entrepreneurs become too involved in their product or service to a point where customers become their second priority. They become fixated on aspects like product development rather than strategizing on how to attract and retain customers. However, a business that fails to build strong relationships with customers with regular engagement will soon experience a drop in sales. If your startup doesn’t revolve around customers’ requirements and expectations, it will fail to gain prominence in the market and lose.

What you can do:

• Focus on customer feedback and reviews to identify what you can do better
• Provide exceptional customer service to create a loyal customer base 
• Maintain an omnichannel presence to help customers reach out to you easily

Being Impatient 

Once you have articulated your startup idea, the tendency to kickstart it as soon as possible will be high. You might want to take the lead in business before a competitor could introduce it to the market. But, the process of executing a business idea requires a lot of researching and planning to understand the feasibility of your product/service. You also have to consider many aspects such as costing, marketing, and sales to ensure your business can continue in the market. 

If you are impatient and start things in haste, you would not be able to successfully carry out your business. 

What you can do:

• Focus on how to manage impulsive behavior and inculcate patience by understanding its rewards (source: Inc)
• Understand those good things take time. Even when your business is up and running, you have to allow sometime to gain momentum. 

Not Being Prepared for Competition 

You might have a Unique Selling Point (USP) for your business that might help you gain a competitive edge in the market. However, this doesn’t mean you can underestimate competition and neglect monitoring the market. If you don’t pay enough attention, your rivals can quickly get ahead of you and crush your business. 

Besides, many entrepreneurs fail to realize that competition can be a healthy dose that drives you to be more innovative. With competition, you would always try to be better than your competitors by improving customer service, products, store ambiance, etc. 

What you can do: 

• Please keep track of your competitors and how they try to survive in the market
• Identify market gaps by analyzing what your competitors don’t offer at present 
• Even if you have a USP, devise novel ways through which you can expand your client base

Being Overconfident 

For entrepreneurs, confidence is a necessary evil. As a startup founder, you need to be confident enough to start your business, overcome obstacles, and successfully carry out your business activities. However, with overconfidence, entrepreneurs tend to undermine potential pitfalls that can challenge the industry. You fail to understand the real picture because you are in the notion that nothing could go wrong. You overestimate the probability of being right and don’t calculate the risks involved in your business decisions. Ultimately, you lose focus and become incompetent in the market. According to a study, overconfidence leads to over-optimistic budgetary forecasts, failing most of the time.

What you can do:

• Engage in self-reflection to understand your capabilities of logical reasoning
• Take an objective stance to evaluate if your confidence overrules other aspects of decision making 
• Speak with your colleagues and mentors to learn how to deal with the overconfidence

Nursing the Fear of Failure

Startup failure rates can be scary and realistically, every entrepreneur should weigh the chance of failure for the balance of probability. When you continuously think of possible ways in which your startup can go out of business, you become more worried about failure than convinced about success. You will be surrounded by pessimistic thoughts that will eventually impact your decisions. 

As an entrepreneur, you become risk-averse and avoid profitable opportunities for growth and expansion of your business. So, a lack of confidence about your business can be equally problematic as overconfidence. If you tend to overthink about failure, it’s time to frame your negative thoughts into positive ones now. 

What you can do:

• Focus on positive affirmations to shift your negative perspectives 
• Assess your chances of failure and potential ways to overcome them. Having a backup plan can uplift positivity.

Thinking You Know It All

An entrepreneur wears many hats in the first phase of the business, especially if it’s difficult to recruit many employees. You would have to do the recruiting, marketing, accounting, selling, and other business aspects. While it makes you a very versatile person, there are times when you would need help from others to perform tasks better. 

Assuming you are at the top of the game and know everything perfectly well is a delusion. This can make your business prone to mistakes, and you can lose the opportunity of doing things better simply because you refused to hear others out. It also makes others feel disrespected, and employees would find it challenging to work with you.

What you can do:

• Embrace the entrepreneurial process as a learning curve without missing out on opportunities to gain knowledge
• Delegate authority for your employees and seek help from colleagues when necessary
• Become attentive to other people’s opinions and get help from experts during difficult times

Premature Scaling

Many identify premature scaling as a death trap and for a good reason. What happens when your scaling doesn’t match with the current market size? You have invested too much money than you should and have wasted precious resources. You also struggle to earn sufficient revenue to fund your business. Needless to say, all of this can quickly put you out of business. As per a study by Startup Genome, many entrepreneurs are prone to a premature scaling trap if they expand expecting market demand to accelerate instead of growing because the demand is accelerating.

What you can do:

• Perform a comprehensive assessment of your organization’s capacity before scaling
• Identify if the market demand has increased and if scaling is a financially feasible decision at present
• Seek the opinion and advice of industry experts to understand the right time to scale up

 Takeaway

Although some pitfalls may seem trivial on the outside, their impact can be manifold. They impede your logical reasoning and rational decision-making ability, which is why self-awareness is essential for entrepreneurs. Every entrepreneur’s dream is to see their business flourish and expand with time. So, identifying these pitfalls and overcoming them is integral for the success of your venture. Once you take accountability for your traits and correct them, you will notice its significant impact on your business.

By Jasmeet Singh

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