5 Popular Mistakes New Ceos Make And How To Prevent Them

James Helliwell

September 27, 2017

	Not rated
	Rate:

A research by the Small Business Administration has shown that only half of new businesses survive the first five years and a third of that go on past 10 years. The statistics are compelling and it’s safe to assume that only 50% of new businesses survive the first five years. Forbes reports more depressing statistic, based on a Bloomberg research that shows 8 in 10 businesses fail within the first year and a half. Why are so many businesses failing even when there is a demand and a 50-50 survival chance? What errors are the CEOs committing? Lets’ look into some of the mistakes startups make and how to avoid them in your endeavour.

Starting a business for the wrong reasons: Most people start their own company because they feel a calling to make changes and create a product or service to touch lives in a meaningful way. Others go into business because “my friend did it, so can I”. Before starting your own company, make sure you have a product that solves societal problems accompanied by the required resources both physical and mental to weather the first couple of months when business is tough.
Failure to plan properly: Some CEOs fail because they don’t have a proper plan in place about the number of staff they require, the right time to hire and how to invest properly at the first stage. Did you conduct a proper research to find out what the business is like? What is the cost of getting permits, keeping the business afloat? Do you have a standard budget to keep expenses in line? Patrick Hart CEO, of Sign Company Bethel Signs & Graphics, shares his experience. “I was interested in starting my own company so I sat down with a Franchise consultant, reviewed types of business and expectations, attended webinars and received a two weeks training on the business I had chosen after which I spoke to some current entrepreneurs in my niche who gave some useful advice on how to proceed”.
Leadership failure: a new startup might fail if the CEO exhibits poor management skills. Poor decision making, weak control of staff or team member, lacking the vision to look to the future and adapt now. If you run the business with a group, it’s not a good idea to argue where staff can see you. Remember they take your lead and the example you set is what they will follow. How do you handle situations that require firm leadership? With a pat on the back or a take-charge attitude to resolve the issue and prevent your business from failing while its still in its cradle.
Believing you don’t need contracts: people who tell you not to use a contract are wrong. Kent Jorgenson, CEO of Sign O-vation Signs and Graphics Company a sign company in omaha advises that “When you hire new staff, get it on paper. Before executing a job for a client, draw up the paperwork to ensure there is legal documentation when issues arise with your payment. This also covers you against scope creep where a client’s expectations go beyond the agreed-upon budget for the project”.

Define your accounting boundaries: A major error some CEOs make when starting out is to use their personal account for their business operation. Tempting as it might be to simplify the process, especially when you can’t afford an accountant; it’s more professional to keep everything separated. Choose from hundreds of accounting software online you can use to keep your books organized.