04/08/2017 by Edwin Pangestu 0 Comments
4 Biggest Mistakes Made by New Entrepreneurs
As we all know, we made mistakes as part of learning process. However, some are more fatal for your business than the other.
Within his vast experience, CRK is a witness to many rise and fall of pastry industries. Sometimes, knowing what to do is easier than knowing what you shouldn’t. Here are the list of 4 biggest mistakes made by new entrepreneurs according to him.
1. Wrong Market Analysis
Entrepreneurs shouldn’t be too idealistic by setting somebody else’s standard in the wrong place. Let’s take the location’s weather as example. When you eat out in Switzerland, it’s great to have cranberry sauce as condiment because the weather is cold. Meanwhile, in Indonesia which has tropical climate, that acidic sauce might not be suitable, perhaps saus Padang is more appropriate. You also can’t ignore the local’s taste preference. You might want your Chicken Cordon Blue have nice stuffing with gruyere or blue cheese, but will the Indonesian market accept the taste of the blue cheese? Or perhaps using sliced cheddar cheese would be wiser. There are other things that needs considering such as the packaging and portioning.
This is one of the most dangerous mistakes to make because owner will be faced with 2 situations. If the owner wants to fix the brand image, it might take a long time. Let say you want to switch from coffee shop to kopitiam, people already recognized know your brand as a failed coffee shop. The other option would be to change the concept, find new location, because sometimes it is easier to start a new brand than fixing the old one. It is crucial to build a new brand with proper feasibility study. This is especially true for those who have big budget to spend, as they tend to follow their emotion and ego. Although I have to admit, it works on some rare occasions. However, if you rely on your ego, it would be more like gambling.
2. Miscalculating the Investment and Revenue
This is also common mistake made by new entrepreneurs. The factors that are often miscalculated most of the times including the seating capacity, parking capacity, sinking fund, to the necessary equipment. If you miscalculate at the beginning, you might not get the return of investment judging by their monthly revenue, even in ten years. Most of the times, new entrepreneurs spend too much investments because of, again, huge ego. It is common for a new business to collapse within months because of this costly mistake.
“You need to work in the field for at least for 2 years to gain experience. This is something that a textbook can’t teach. Just like GPS, it can only give you the time estimation to get from this place to other places through the highway. But sometimes, there are other obstacles, such as indiscipline drivers or the lack of manned toll gates. GPS don’t give solutions to these situations, however, experience do,” he said.
3. Lacking operational knowledge
Business owners might not be the most skilled person in the company, but they still need to have knowledge in the business operational. “They may not understand the technical side to make the products, but at least you need to know what makes a good, proper product, the commercial value, the one that makes high profit, also the proper standard service procedure. If you don’t have the required knowledge, how can you tell if your staff is cheating on you? By knowing the operational, you would be wiser in spending your budget.”
CRK also realizes that there are some successful business owners who act more like investors, which means that they don’t get involved in the operational. However, he also believes these kind of owners manage the financial aspect of the business. The main point is, you can’t open an outlet somewhere in Borneo, comes once in a year and expect everything to be okay.
4. The Trust Crisis
Having the trust crisis between the investor and the one who operates the business is also one of the most dangerous mistakes to make. The low engagement between them and some negative rumors from outside might cause them to grow apart. If an entreprenur doesn’t understand the technical aspects of the business, he should have someone he can fully trust. In some cases, the suspicious owners will cause the operators to work uncomfortably. On the other hand, it is also a common to see the operators cheat on the owner by using his budget to buy second hand equipments. “Just like a marriage, you have to be highly engaged with your partner from the beginning. You have to know the background, the track record, and the vision,” said CRK.