3 Mistakes First-Time Entrepreneurs Should Avoid

3 Mistakes First-Time Entrepreneurs Should Avoid

If you go out on your own, steer clear of these mistakes

By
Mindy Charski / US News & World Report
Posted July 17, 2008

First-time
entrepreneurs tend to make similar mistakes—in good economic times or
bad. If you’re considering venturing out on your own, steer clear of
these mistakes:

1. "Forget research and planning—I just want to get going."
"We often find that people haven’t thought through their business, and
that’s what tends to get them into trouble," says Eric Zarnikow,
associate administrator for the U.S. Small Business Administration’s
Office of Capital Access. "A business plan is really the road map of
how they’re going to go about running the business. It will help them
determine what resources they need financially or otherwise…It’s also
going to be a key thing in talking with a bank or other financing
sources about their business."

Doing your homework doesn’t eliminate risk, but it can help you
"understand risk and when it might come up and what options you have
for how to deal with it," says Dennis Ceru, who teaches graduate
courses in entrepreneurship and business strategy at Boston University
and Babson College.

2. "I’m sure cash will come in quickly." "As a
general rule, getting to be profitable in a small business typically
takes longer and costs more than anyone plans for," says John
Bjeldanes, a San Diego-based business counselor with SCORE, which
offers advice to small businesses. "If there’s no leeway in the
[business] plan, you run into problems," he says. Ceru suggests
thinking of your business as a life form that has to pay three to nine
months of "living expenses" like rent and phone service while you’re
busy finding customers.

3. "Now is a good time for me, and it’s about me." When unemployment goes up, start-up rates go up, according to Scott Shane, author of The Illusions of Entrepreneurship: The Costly Myths That Entrepreneurs, Investors and Policy Makers Live By.
"We see an uptick as the economy gets worse, but that’s probably not a
good strategy," says Shane, a professor at Case Western Reserve
University. It’s important to honestly assess—regardless of your
personal situation—whether the opportunity is right. Shane says, "The
market doesn’t care whether you really want to be an entrepreneur, and
that’s one of the biggest mistakes people make."

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