Dodge These Entrepreneurial Mistakes: Tips for Young CEOs
Maybe you’ve been working at a traditional job for a few years now, but ever since high school, you’ve had an interest in entrepreneurship. Or perhaps you’re struggling to land your first job and you’re wondering if you should create your own instead. Here’s how to avoid certain weaknesses that are common among entrepreneurs in their twenties, from overlooking ecommerce to going into business with friends.
Not Choosing the Right Business Structure
Choosing the wrong business structure can lead to personal liability for business debts and taxes, which can harm your personal assets and credit score. Additionally, it may limit the business's growth potential, raise tax rates, and cause legal problems. Forming an LLC provides personal liability protection for business debts and lawsuits, while allowing for flexible and easy management, pass-through taxation, and potential tax savings. Registering typically requires only a few steps, but check the specific rules in your state.
Having a Lax (or Nonexistent) Organizational System
From your business plan to financial documents to contracts with investors and freelancers, you’ll have a lot of paperwork to keep up with as you launch your business. It’s critical that you have a method for keeping everything organized, including digitally. Scan hardcopies of your documents and upload them as PDFs onto your hard drive; you can try this listing for a convenient way to use your phone or other mobile device to take photos of documents and convert them to PDFs. Keeping digital copies of all of your business’s relevant paperwork gives you a way not only to keep everything stored in an organized way, but also makes it easy to edit these documents so you can keep the information they contain organized as well.
Doing Business with Friends
If your friend is enthusiastic about your business idea and they’re also interested in entrepreneurship, you might be tempted to go into business together. While this might seem like fun at first, it can be a risky proposition — and your friendship might suffer as a result of this arrangement. Feel free to bounce ideas off of your friends and get feedback, but remember that combining friendship with financial endeavors can backfire.
Tackling Every Task by Yourself
When it comes to managing your business, you might not feel confident about entrusting responsibilities to anyone else right away, even if you have room in your budget to hire part-time employees or contractors. But this approach can hamper your customer service and the quality of your work. Due states that if you’re turning away customers or you’ve received negative reviews for poor service, it’s time to bring another set of hands on board. You can also turn to a mentor for guidance and support.
Only Marketing to Young Consumers
If your marketing efforts have been primarily directed to customers around your own age, it’s time to think bigger! Consider how you can reach senior customers, too. When designing marketing materials intended for older audiences, Coming of Age recommends emphasizing the practicality, affordability, and value of your products and services.
Failure to Optimize Your Website
Optimizing a business's website is crucial for attracting and retaining customers, improving search engine rankings, establishing credibility, and increasing conversion rates and revenue. Adding web personalization features, such as tailored product recommendations, personalized greetings, and location-based content, can significantly improve user engagement, customer satisfaction, and conversion rates by providing a more relevant and seamless browsing experience. However, it's essential to balance personalization with privacy concerns and ensure that the collected data is used ethically and transparently.
Mixing Business and Personal Finances
Using the same checking and savings accounts, or the same credit and debit cards, for your personal and business finances can get confusing quickly — and when you need to provide documentation for your business expenses, you might lack the paper trail. Instead, you should register your business as its own legal entity (such as an LLC, which we discussed above). You will also want to open bank accounts solely for your business. This will make it much easier to track and document your business income and expenses. Get a credit card for your business, too — you’ll need to commit to a personal guarantee for this, and the card should only be used to cover business expenses.
Your twenties can be a fantastic time to start a business and chase your dreams. However, young CEOs can be prone to making mistakes due to their limited work experience. By following these tips, you can choose the right business structure, optimize your website, get used to delegating, and promote your business to customers of all ages!
Become a member of the Woodstock Area Chamber of Commerce & Industry to receive members-only benefits that will help you build your business in and outside our community!