Millennials are the entrepreneurial generation:
- 30% have started their own business
- 49% plan to start their own business in the near future
The problem today isn’t starting the business, that is the easy part thanks to legalzoom, social media, and all the great tech we have that can make the process easier. The hard part is learning to run it well early on when everything is so new. It truly can feel like drinking from a firehose (I know from experience).
As I have worked with numerous younger founders, I have realized many are making the same 5 costly mistakes that can be easily avoided. Let’s dive into them so you can avoid them too!
1. Focusing On The Wrong Problems Early On
Many millennial founders/business owners focus too much on the nonessentials early on. In the first 6-12 months of running your business, what matters is getting the business up and running, getting clients, learning what those clients need, etc. It’s not about all the shiny new things, the best equipment, the coolest clothes, etc. Focus on who your target client is, what pain points you can solve, and how you can differentiate yourself from your competition. Then create a process and market to that specific group. Be a problem solver first!
2. Focusing Too Much On Perfection
Whether it’s with the product, the business, the service, the marketing, etc. too many business owners search for perfection before they put anything out there. I can tell you one thing, perfection is not achievable. You need to just get your work out there. Create, deliver, test, and see what works well and what doesn’t. Then iterate based on the feedback you are getting.
You will never be the perfect business early on, but you can become a great one by actually testing new ideas and seeing which stick for your target market.
3. They Think A Great Product Or Idea Is Enough
So many business owners think they have the best idea.
It’s maybe even life changing in their own eyes.
So much so that they think it will sell itself. I am sorry to tell you this, but that is just not how business works.
It’s awesome to have a life changing product or service, but if no one hears about it it won’t matter. Coming up with the idea is one thing, putting it in front of the right people is another.
Marketing and sales are the lifeblood of your business. You have to know how to distribute and sell your business for it to go anywhere. Figure out where does your audience lives and why they need your product/service. Them go out and Educate them. Tell them the story. Show them how it solves their problems. Then continue to do this over and over and over again to build your business. It should feel repetitive to you!
4. They Worry About Compensation Too Much Early On
Obviously we all need an income to live off of, but most businesses fail simply because they do not have enough cash flow. The more money you can keep in your business early on, the better.
Before you start your business, build yourself a runway. Look at how others in your industry did it and see how long it took them to be able to pay themself. Some industries may be 6 months while others may be 24-36 months .The longer the runway you have, the easier it is to survive.
I know it sucks to not be taking an income, but think of every dollar you leave in the business as an investment to grow it. Those dollars can be used to hire, invest in paid advertising, etc. Anything to help your business grow!
So many business owners pull too much money out of their business early on to invest elsewhere when, in actuality, investing in your own business can reap the greatest dividends.
5. They Don’t Manage And Separate Their Cash Flow
I have seen way too many business owners commingle their business and personal bank accounts. Please do not do this. Knowing your numbers for your business is crucial to your success, but it’s also so important for taxes. The deductions you can take need to be organized and it’s really hard to do that when your personal expenses and business expenses are mixed together. Have separate bank accounts, credit cards, etc. between the two. And also make sure you are saving for taxes based on your profits/compensation. So many business owners fail to do this and end up owing the IRS hefty tax bills that they are unable to pay This is avoidable by setting aside 15-25% for taxes based on what you are making.
As you start/scale your business, do whatever you can to avoid these 5 costly mistakes.
Disclaimer: none of this is advice, it is just for informational purposes. Talk with your financial planner before implementing any of these strategies.