Founder and CEO of ERG Enterprises. Nationally recognized thought leader on entrepreneurship, investing and leadership.
One in every five businesses just starting out will fail in the next 24 months—this is according to data from the Bureau of Labor Statistics. When it comes to certainty, entrepreneurship doesn’t afford much.
For us entrepreneurs, we’re taught about what we should do to bring our idea to fruition. Develop a business plan. Work on our pitch. Get funding. Go from A to B to C.
But school and the internet won’t teach us about the mistakes we can’t afford to make as entrepreneurs—the don’t-dos that limit our chances of success, not just for our present venture, but for our career as business builders.
So, if you aspire to start a business, this article is worth your time. In it, I share the five biggest mistakes I see new founders make. Avoid them, and you’ll improve your chances for success. Let’s dive in.
Mistake No. 1: Believing You Can Do It Yourself
When I built my first business, I relied on many people. Mentors, investors, partners, employees—the list goes on and on. I learned that entrepreneurship is as much a social discipline as an intellectual one. That led me to devote a chapter in my first book to a common but misguided mindset I see in new and aspiring founders. It supports the belief that we can build profitable companies through our individual brilliance alone.
I’ve encountered hundreds of founders who fit into this category who’ve pitched my private investment company, ERG Enterprises. And all have left our offices without funding. Why? Because businesses don’t rise on the shoulders of one. They grow through the investment of many. Businesses need financial capital to accelerate growth. But far more important is the human variant—knowledge, talent and creativity.
Believing you can start and grow a successful company all by yourself is an exercise in vanity, not the science of entrepreneurship. At the end of the day, entrepreneurship is about embracing the we, not the me.
Mistake No. 2: Starting A Business Outside Your Expertise
Attend an MBA program and you’ll undoubtedly hear this advice: “Stick to your area of expertise.” Had I chosen business over medical school, my career might have looked very different. I probably would’ve stayed only a hand surgeon.
That said, this advice does hold water in one very specific context: when building your first business. That’s when we’re tasked with learning the profession of entrepreneurship. We need every advantage we can get, which is why we should make things easiest on ourselves—and that comes from sticking to what we know.
Mistake No. 3: Finding The Wrong Partners
Co-founders are an important aspect of most startup enterprises. I’ve never had one, but I’ve invested in numerous startups that have, and they eventually achieved marked success. I’ve also invested in plenty that have failed. I’ve noticed the biggest difference between the former and the latter is the marriage between co-founders. The pairings that failed were never aligned on their long-term vision for their companies, while the opposite was true for the enterprises that fit into the successful category. The takeaway: Be careful when choosing a partner. As with any marriage, understand their goals and aspirations, and make sure they align with yours before entering a relationship. That includes their desired role and result of starting a business.
Mistake No. 4: Setting The Wrong Expectations
I believe entrepreneurship is the most rewarding profession. I think it’s also by far the most challenging. The role doesn’t mean you automatically step into an exciting lifestyle that commands excitement, riches and respect. In fact, it’s just the opposite. At least in the early stages, you work harder for less money than a full-time job. You sign up for sleepless nights, bouts of self-doubt and moments of intense pressure, which often last for years with no guarantee of reaching your intended destination. The rewards of being an entrepreneur can be great, but they can also be disappointing.
So, it’s important to understand and fully acknowledge the realities of the profession before signing up for it. That means confronting the common misconceptions—e.g., that you’ll have more free time, be your own boss, get rich fast—and setting the right expectations. By acknowledging the harsh realities of the profession, you give yourself the best chance for success.
Mistake No. 5: Focusing On More Than One Idea At A Time
We’ve all met the individual with numerous ideas for starting a business. Each day inspires a new product or company. One business pivots to another, pivots to another, and so on. These transitions occur each time the founder faces the inevitable resistance that all entrepreneurs encounter. Brilliant ideas are sexy and inspiring until reality points out their flaws—the point when the hard work truly begins. As this cycle continues, the founder eats up precious time, energy and capital without any measurable progress, in terms of the business itself and the crucial skills and knowledge of building a business from the ground up.
I believe entrepreneurs who start a business should see it through to an exit. That could mean selling it, going through an acquisition or failing. Each avenue provides important lessons for the entrepreneur that will benefit their long-term career. By switching from idea to idea, however, you short-change yourself by never acquiring the experience that can benefit your future.
Boosting Your Chances Of Success
Like any successful entrepreneur, I’ve made countless mistakes. That’s the reality of a profession that lacks guardrails and a clear path for progress. But not all mistakes are created equal. The mistakes examined in this article limit your chances of success as an entrepreneur. They’re also entirely avoidable.
By avoiding them, you can improve the likelihood that you build a successful company and see a return on your time, effort and sacrifice. You don’t need to make it harder on yourself. The statistics show the profession is hard enough. You need to take advantage of every advantage.