MISTAKES ENTREPRENEURS MAKE RESULTING TO BUSINESS FAILURE (PART 1)
It’s easy to start a business, but it can be hard to grow it and sustain it.
Recent studies show that 50% of small businesses fail within the first year; and that 95% fail within the first 5 years.
VCS is “lucky” to have survived and grown into an empowered creative agency for the past 14 years, but it’s not just about being lucky. We have had our share of hard times and we have experienced cycles of stumbling and getting up. Through this roller coaster of experiences, we have learned how to do better and how to grow stronger.
If you are an aspiring entrepreneur — or if you are already running a start-up — here are some of the mistakes that you have to avoid early on, in order to help your business grow and overcome its survival stage.
MISTAKE 1 — Not having a Driving Purpose
Businesses should not be built for the sole reason of making profits.
Before day dreaming about being financially free, you have to nail down WHY your business needs to exist in the first place. What value does it give? What problems does it solve? Who are the people that you serve?
VCS believes that growth can be achieved through strategic creativity. The main purpose of the company is to use strategic creativity to drive growth for our client’s businesses, for our team’s personal development, and for the Philippine creative economy. We are also empowered to use strategic creativity to contribute to the progress of the causes that we believe in, including but not limited to professionalism and entrepreneurship for creatives, gender equality, and preserving the environment.
As Steve Jobs said, “We are here to create a dent in the universe. Otherwise, why else even be here?” If you are running your business with no clear driving purpose, then there is a big change that you will end failing.
MISTAKE 2 — Having Unclear Goals and Not having Aligned Steps
The first step in determining your vision is to imagine your future state — ideally in the next 5 or 10 years. It’s important to know where you want to go.
But that’s just the first step. The second and more crucial step is to know how to get there. Determine the 5 big, bold steps that you need to take in order to achieve your vision. Break down what you need to achieve into yearly, quarterly, monthly, weekly and daily goals. Also, remember to make your goals S.M.A.R.T. — Specific, Measurable, Attainable, Realistic, and Time-Bound.
In VCS, each department comes up with programs and strategies that will help achieve our yearly objectives. We ensure that the progress of our goals is reported every quarter during our Townhall meeting. We also have weekly huddle meetings to monitor our progress and discuss challenges and learnings.
If needed, our goals are adjusted and our strategies are recalibrated. We also see to it that we involve every member of the team in our planning and reporting process, so that we are all in the same boat and we are all moving in sync towards the same direction.
Think of it like your daily commute when you use your GPS app. You input where you are going, you find out how to get there, and you know how much time you need to get where you want to go. You consistently check where you are, and when you encounter road blocks, you know where to reroute.
Do you already know the specific details that will help you achieve your vision? Will your tasks today move you closer towards your goals? If your answer to these questions is a resounding Yes, then you are well on your way to making your business goals a reality.
MISTAKE 3 — Mismanaging Finances
Cash is the lifeblood of any business. Without it, your business dies. It’s like gasoline to a car. You need to have a steady flow of it, and you should never run out of it!
Some of the most common mistakes that start-up entrepreneurs make in terms of mismanaging finances are the following:
· Mixing business money with personal money
· Having o accounting knowledge
· Not having the ability to identify cash leaks (pilferage, too much inventory and accounts receivables)
· Spending too much
· Growing too fast and over-expanding
· Not having the ability track and monitor regular financial dealings, growing debt, and urgent collections
Being a right-brained person, I used to hate math and I was already sold on the idea that I will never be good at it. When I became an entrepreneur, however, I was forced to learn Finance and Accounting.
Avoid relying on your accountant for everything. All entrepreneurs should understand how money flows in a business and how Income Statements and Balance sheets are read. Trust me, loving numbers will be very rewarding.
MISTAKE 4 — Hiring and Keeping the Wrong People / Mismanaging People / Maintaining a Weak Culture
“Customers will never love a company until the employees love it first.” We live by these words by Simon Sinek. Human Resources should not be taken for granted, because building a good company culture is important for any business.
When I was starting, my first teammates in VCS were my college friends. This is obviously because I already know how they work and I already trust them. I learned later on that, as a business expands, you cannot be limited to hiring the people that you already know. You have to open up to a bigger pool of talents.
To ensure that the employee you are hiring is the right fit for your company, you have to start by having a solid recruitment system. VCS employees undergo a thorough screening process before they are hired. We hire slow. Our recruitment system determines if the applicant fits the position’s role and the culture of the company.
What does VCS value more? We value soft skills more than technical skills. The applicant’s character and growth potential have more weight versus their technical skills.
Once employees are hired, there is an established Feedback System. Employees know how their development is measured and how they can grow in the company. They are not left in the dark about how they are progressing. Merit systems and promotions and salary increase metrics are in place.
A solid company culture is rooted on you and your team’s shared values. The members of your team should know and understand what you believe in and what you stand for. Core values dictate behavior and help employees understand what is right and wrong. With the right values in place, they are guided with their behavior and they can make decisions that will be best for everyone involved.
— — — — — — — — — — — — -
I may be an “accidental entrepreneur” but the growth of VCS is anything but an accident. Throughout the past 14 years, me and the members of Team VCS have carefully and consciously made decisions that helped us grow together. Yes, there are failures and fallings, but always see them as experiences from which we can earn valuable lessons.
The mistakes that I’ve detailed above are only some of the things that we have experienced over the years. In the future, I’ll be sharing more tips and learnings that will help you grow your business and empower your team.
If you’ve got other tips, questions or suggestions, feel free to share them in the comments below.