When it comes to entrepreneurship, a few ideas stand out.
You must be willing to put everything on the line, risking it all to make your dream a reality. You will need to put in the work to reap the rewards, and that can mean sacrificing things you’re not used to giving up. It would be best if you became close friends with the words “setback” and “change,” as above all else, the path will be new.
These ideas are nothing new to Montreal entrepreneur Maged Elhami. As a co-owner of many businesses with his brother, Elhami understands the ins and outs of being a self-starter.
He also knows what it takes to ensure that running a company is a successful venture for all involved.
For Elhami, it’s crucial to learn from mistakes — but it’s even better to avoid them in the first place. He gave a few of the top financial mistakes made by first-time entrepreneurs.
“With each new venture, you bring valuable wisdom from the last,” Elhami said. “You understand and have overcome the challenges you faced in previous businesses, and you’ve overcome your mistakes. Continue to learn and grow with each new venture, and you’ll come out successfully.”
Not Having Separate Bank Accounts
Many first-time entrepreneurs think that they can coast for a while on their personal account, rather than immediately creating separate bank accounts for the business.
That’s a huge mistake, Elhami said. When it’s time to file taxes, you’ll end up with a killer headache and serious problems with your bookkeeping and a potential audit. Not good.
It might take a lot of tedious paperwork, but you should commit to separate savings, checking and credit card accounts before you start receiving any revenue from your clients or customers.
Not only does this give you a better picture of what your finances actually look like, but you avoid the very easy pitfalls of inappropriately using personal funds for your business, which can land you in trouble and end your business when you’re just getting started.
Making Big Purchases
Many business owners love to drop this well-known adage: You have to spend money to make money.
While fundamentally correct, this idea leaves out an important caveat: Don’t spend too much.
It’s common to suddenly make big purchases for your business, especially on the front end as you’re getting it off the ground.
Maybe you need to purchase a work vehicle to make deliveries of your product, or maybe you realize that your restaurant needs an expensive upgrade to produce your signature dish.
Surprise expenditures will happen to the best planners. But if it’s possible to meet the need without shelling out bucks, like borrowing a friend’s car for the first few months, or changing the menu to avoid an expensive renovation — that’s the smarter strategy, Elhami said.
“For the first year or two of your business, saving money will be as or more important than making money,” Elhami said. “Look for ways to avoid big purchases and lower your overhead. That’s just as important as bringing in customers.”
Not Focusing On Small Improvements
When starting anew or resurrecting a broken idea, don’t forget to focus on the progress made, Elhami said.
“Don’t forget to applaud yourself for creating again or breathing new life into a project you once walked away from,” Elhami said.
This can happen in many ways, from focusing on steps of your venture that were successful to changing the ones that weren’t. You can pay close attention to the areas that brought in positive results and find similarities in the ones that didn’t.
So if starting a new venture, or a few of them, is your calling this year, don’t forget what Elhami says about growing from your mistakes: “Continue to learn and grow with each new venture, and you’ll come out successfully for doing so.”
As Eric Ries makes clear in his excellent book The Lean Startup, success in business can be learned by creating and following the steps learned by others, through their own mistakes and hard work.
“I have learned from both my own successes and failures and those of many others that it’s the boring stuff that matters the most,” Ries wrote. “Startup success is not a consequence of good genes or being in the right place at the right time. Startup success can be engineered by following the right process, which means it can be learned, which means it can be taught.”