Being an entrepreneur is difficult. One day you are a crook with a big dream. Next, you are the CEO of your own company. It can be intimidating. Most business owners who act as presidents of their companies often have never served as CEOs of other companies, creating a disconnect from best practices and behaviors.
I have coached many entrepreneurs and I've seen a tendency for newcomers to be their own boss. Here are some common mistakes I first saw in entrepreneurs, so you don't make them either.
Related: The 7 Most Common Mistakes New Entrepreneurs Make
1. They seek out the best talent instead of nurturing it.
Everyone wants the best of the best to work for them. The problem, however, is the inability to nurture this top talent.
Without the leadership experience necessary to manage people with strong core competencies, a new CEO may not necessarily meet the desires and the needs of these performers. These same employees are also expensive, and in the early stages of a business where the infrastructure is not present, this creates a situation of loss rather than growth.
The best angle is to learn to encourage talents rather than buying them.
At the beginning of one of my own companies, we needed professional photographers, but all the big names were charging a lot of money. So I got creative and instead looked for photographers who had a sense of design but had no business experience. Although they hadn't monetized their talents yet, they were good at what they did, which allowed me to get amazing work at fractional costs.
2. They don't create a clear revenue model.
Who in business doesn't want to make money? Most entrepreneurs know what they're selling and how much it costs to do so, but creating a revenue model is much more than learning how to facilitate a transaction. The lifetime value of a customer needs to be defined, as does a plan for how to capture that value over time.
Many people believe that once customers buy their products, they need to find new customers. Instead, you need to focus on how to optimize and extend the relationship with your current customers. This residual income helps you grow faster.
The key to creating a good revenue model is no different than a business plan; you need to plan all of your products over the next 10 years and make it easier for the customer to do business with you. Although the pattern changes over time, the map and direction are set.
Related: 5 tips for running a successful business
3. They take new directions without testing the changes first.
So many times when new entrepreneurs fail, they often attribute that failure to the price of their product or the messaging on their site. They say changing direction so late in the game would have made it impossible to sustain growth.
If you think your price is too high, don't look to cut your costs, shipping, and all that. remains, only to offer a discount to customers who never had a problem with the price initially. Instead, reduce your price to zero cost and test if there is increased demand for the product at this new price. Testing the new option should be done quickly and at no cost to you. If demand is up, then spend time and resources to facilitate a lower price.
Base changes on data, not assumptions.
4. They fall victim to trends rather than establish authority.
At the start of a business, getting attention and following what others are doing might seem like a good idea. It obviously worked for others and should work for you the same way, right? The problem with following your competitors is that your customers will see you as a copycat rather than a company with a unique identity and purpose.
Don't fall victim to trends. Stay true to your message, your direction, and find ways to draw attention to it. No great business has ever started from scratch with immediate appeal. In fact, many of today's biggest companies started out as a niche product or service that later evolved into a simpler, more mass-accepted service.
Let these four caveats keep you from doing the same mistakes that most new entrepreneurs make. Take the time to grow your business and plan for the future the right way.
Related: 9 entrepreneurial lessons you never learned in school
