5 Mistakes every new entrepreneur makes

5 Mistakes every new entrepreneur makes

by John Sortino

1.        Don’t organize.  If you have an idea for a company you want to start, you will then need to do many different jobs to make the idea work.  Sometimes you need to be a boss, sometimes you need to be a bookkeeper, sometimes you need to produce a service or product for your customers and sometimes you will need to do marketing and sales. No one person is good at all four parts (most of the time they might be good at two of the parts). This is what I call the 4 point business triangle. 

2.       Don’t evaluate.   When you evaluate the company, you can use the value of the company as an asset, which is really like cash.  Most new entrepreneurs think the value is equal to sales.  Not true at all.  My teddy bear company had sales of 20 million, but the value was 100 million because investors were willing to pay 20 dollars a share for the stock.  The company had 5.5 million shares of stock.

3.       Ignore market size, need and completion.  My idea for the teddy bear company was to sell toys. The toy market and need in Burlington, Vermont is very small.  Everyone shopped at stores like toys are us to buy their toys.  I changed my idea from making and selling a toy in Vermont to making and selling a gift for Valentine’s Day using radio.  The market was very large, the need is large and I had little competition using the radio.

4.       Don’t Incorporate.  If you incorporate and think like a corporation you will become a more successful entrepreneur.  When you incorporate, you can use your stock as cash when you organize.  Giving stock to people who are interested in making your company successful.   This is good for many reasons but the biggest is that they now have a piece of the company and will be willing to take risks like not receiving a paycheck until sales come in.

5.       Don’t have a trusted advisor.  Most new entrepreneurs think they can learn everything themselves using a few clicks.  For example, new entrepreneurs when looking for help to increase their sales or income, ask their google search engine for answers.  They get page after page of some company trying to sell some kind of do all tool.  This is a big mistake and will end up costing new entrepreneurs wasted time and money.  Every entrepreneur should have a trusted advisor.  Someone they can pick up the phone or email and ask a question to.  A trusted advisor will help you get you to your goals faster, because they are your goals not some other company’s goals.