For new entrepreneurs, sometimes it can be difficult to decide what you want to charge for your services, and understand how to bring together your dreams and desires while still making the math work; you have the dream, but where does that break down into cold, hard cash? Here are 5 pitfalls that I see happen time and again with new entrepreneurs:
They don’t begin with the end in mind. New entrepreneurs are often so worried about making a living that they don’t consider being selective with their hours or clients. The set an hourly rate that forces them to reach their income goal through volumes of meetings and work! This is a perfect way to wear yourself out and begin to feel like you’re just punching a clock again.
They only use their gut to decide what they should be charging. Checking in with your internal body compass is a great way to assess if you’re on the right track, however, so many people tell themselves “stories” about their money that sometimes this isn’t the most effective method-most new entrepreneurs get a knot in their stomach just from thinking about charging someone, so you have to get past that story before you can objectively look at pricing.
They are starting part-time and defer the decision. Some new entrepreneurs tell themselves, “I’m transitioning from my existing job and doing this on the side, so I don’t need to start charging what I WANT to charge immediately.” This just defers the inevitable AND causes you to work at the job you want to leave for that much longer!
They don’t use the right math to figure out how to maintain their existing lifestyle. Most new entrepreneurs use their salary from their last job to determine what they need to maintain their life, but being an employee and being a self-employed business owner are so different financially that new entrepreneurs lose time and money because of miscalculated assumptions.
They under value the experience they have. Many new entrepreneurs are paralyzed by the thought that part of their rate is a reflection of experience and mistakenly think “small” when setting their rate. What new entrepreneurs need to realize is experience is subjective, and the actual game changer is the level of confidence they have in their direction! Each one of us was put here to offer something unique to others.
One of the reasons a person decides to become self employed is improving their bottom line, yet sometimes the thinking that caused them to originally be frustrated with their finances will also bring those same issues into their new business.
When new entrepreneurs only look at what they are comfortable charging, and they don’t figure out what they should be charging, there’s bound to be setbacks. Avoiding these pitfalls will ensure that the new entrepreneur does not waste time or money when launching their new venture!…
It is estimated that something like 20% of new businesses fail within a year of starting up, and 50% within the first three years. These are grim numbers, especially for anyone who is considering starting up their own business. Fortunately, there is an upside, looking at those figures in a slightly different way, 80% of all new business survive their first year and 50% make it to at least three years.
What anyone looking to start their own company needs to do is to analyse what the businesses that succeeded did, that the ones that failed didn’t. There are in fact a number of common mistakes that failed businesses have made and knowing what they are will give newcomers the necessary knowledge to help them avoid falling into the same trap.
Business failures are often blamed on insufficient start up capital or not hiring the right people. The truth however, is that the failure of many new businesses comes down to something far closer to home, a failure to thoroughly research the potential viability of the business in the first place. Believing you have a great idea and throwing money into getting it up and running, without first having undertaken proper market research is the number one killer for the majority of new businesses. Fortunately there are ways to avoid this by carrying out relatively simple surveys yourself, without breaking the bank on expensive market research organisations before you have even begun.
Test out the viability of your business by asking the opinion and advice of your own network of contacts. Take a look at government data on such things; it is almost always available completely free of charge. Take a look at businesses operating in areas similar to yours and see if they are succeeding or failing. If they are profitable take a look at why, and find out whom they are selling their products or services to. One of the most common mistakes made by new businesses is that of over estimating the market impact that they will have. Setting up in a larger than necessary office or shop; hiring too many people and purchasing unnecessary and expensive equipment based on cash flow projections that have more to do with hope than reality, are the quickest ways imaginable to send a new business to the wall.
The importance of accurate market research and enforcing a strict cost control regime cannot be overstated. Never be afraid to seek professional, expert advice on financial issues, preferably from an experienced business accountant or financial adviser. Make sure you have enough money to get your business idea up and running and have contingency plans in place should it fail to take off in a short period of time. Also be aware that situations can arise that are entirely beyond your control, such as interest rate rises, for example. Having healthy cash reserves to get you through an unforeseen crisis is an absolute requirement in this day and age.
A professional business plan …
Starting an internet business can be tricky and as anyone who has become successful online can attest, making mistakes is a part of the process. In order to reach success online, there are going to be some failures along the way. How someone deals with those mistakes and failures is going to determine whether or not they will ultimately reach success in their venture.
One of the biggest mistakes that many people make when starting an internet business is not taking the time to learn everything possible before getting started. Making a living online is much different than making a living in any other way. There are a lot of people who have found a great amount of success when starting an internet business. Learning from those people can help new internet business people to avoid many of the other mistakes associated with online earning.
Another mistake that people make when starting an internet business is to ignore the huge benefits involved in social media. Internet marketers who don’t involve themselves in social media are missing the boat. Social media has taken over the internet – one only has to look at statistics for sites like Facebook and Twitter to understand just how important these types of sites can be to the success of an online business. Taking the time to learn how to leverage sites like this from someone who has already done it is a great idea when starting an internet business.
Not having a comprehensive marketing plan is another error that many people make when starting an online business. Just like in offline businesses, marketing is key to overall success. Online, there are even more websites and businesses that are clamoring for the attention of customers than in the "real" world. Creating a marketing plan that works and sticking to it is crucial in the overall success of any online business.
Giving up too quickly is a huge mistake that people make when starting an internet business. Becoming a success on the internet will take time and it will take some hard work. For most people, it’s fun work but it’s not always easy. Giving up before a business has had a chance to succeed is quite possibly the biggest reason that new businesses fail online.
Failing to get involved in an online community of like-minded people is another common mistake when starting an internet business. No one is an island and making a living online can be a lonely place if there is no one to talk to and get advice from. Smart online business people find a community of like-minded people to talk to, share concerns with, and get advice from. This can make the difference between loving the online world of earning and giving up in frustration.
Starting an internet business isn’t the easiest thing in the world to do. Everyone is going to make some mistakes along the way. How someone chooses to deal with those mistakes will determine their success or failure …