Warning to Millennial Entrepreneurs: Avoid Committing These 6 Fatal Errors

By Laura Callisen

In increasing numbers, millennials are making the decision to start their own businesses. Why? Because they are increasingly not finding their “dream” jobs after college, they are having a difficult time fitting into the “culture” of traditional work environments, they want to be in charge of their own work life, and they want to decide how, when, and where they work.

However, not knowing the fundamentals of starting a business can result in some costly, if not fatal errors. Here are six of those errors that you can avoid.

Fatal error #1: Failure to identify and clearly define your vision and goals

You know what you want to do; it’s in your head. But your vision is not in everyone else head, and you need to get it down in writing, both to keep yourself focused and so that you can clearly explain it to others–people you eventually employ and investors you hope to court. Many young entrepreneurs believe that all of this "vision and goal stuff" is just for older traditional businesses and isn’t really necessary in today’s fast-paced digital business environment. They could not be more wrong.

You may not have excelled in academic writing in college–those essays and papers that earned poor grades. But this is a different type of writing. You need to get your own future in writing. If you don’t, you will lose focus, you will have confused team members, and potential investors will see you as a poor risk.

The solution: Let’s suppose that you want to develop software apps. To get your vision, you have to ask yourself a key question: why do you want to develop software apps? If your answer is just to make money, then you don’t have a vision. Your vision should be bigger than that. Think in terms of who will benefit from what you develop and how. Now you will get closer to a vision statement. You want to make people’s digital experiences better through app development that will help them complete online tasks easier. Now you have a vision.

Defining your goals will come from that vision. What specific tasks can you make easier for online users through the software you plan to develop? These things will constitute your goals.

Now when someone asks you what your business is all about, you will be able to explain it well, and you have the beginning of a business plan, which you will need to develop.

Fatal error #2: Not having at least a cursory business plan

Competition is tough, no matter what product or service area you are in. And just an outline of a business plan will help you understand a number of things:

• Who is your target market?
• Who is your competition?
• What will you do better than your competition to bring in customers and, yes, steal customers from them?

If you don't have answers to these questions, you should not spend a dime or a minute of your time starting a business until you do.

The solution: Do the research. Going back to our software apps example, if you are going to create apps that will assist college students with all aspects of their lives–academic, personal, financial–then you do have a target market: every college student in the country.

But what about the competition? What apps are there currently that do these things? And how can you make your apps better than theirs? Is the market saturated or are your app ideas providing something new? You may discover that the field is pretty saturated. In this case, you will need to look for a different need to fill and a different target audience. Don’t give up your dream. Just make that dream feasible.

Fatal error #3: Lack of financial planning

A lot of businesses begin on a shoestring and yours may be one of them. If you have decided to make the Internet a more beautiful place by designing exceptional websites, then you need little more than a great computer, a printer, fax, phone, and plenty of design tools. Your startup costs are pretty minimal.

But you also have to plan for your marketing costs, and you will have to determine your pricing. For marketing you will need initial cash--and you cannot know that pricing until you determine what your profit goals are. Will you charge by the project or by the hour?

The solution: Get a basic budget outline. You will need to do some research on marketing costs. The best method to determine this may be to talk to someone who already has a successful business and get some sound advice on marketing a new business. A lot of Internet marketing is free if you have the time, but paid marketing and advertising has its place too, and you need to have the cash on hand to pay for that. Budgets for new businesses can be tight. Getting a mentor or help from the SBA (they have free mentors!) is really a must.

Fatal error #4: Thinking you can do it all by yourself

In your enthusiasm, you may truly believe that you can operate every part of your business on your own. You may have a lot of skills and talents, but you will find that you don’t have them all; and you don’t have unlimited hours in a day. You do have to sleep and you do have to eat and take care of personal business at times.

The solution: Find the help you need and don’t be afraid to seek it–it is not a comment on your intelligence or abilities. If you are a great, creative designer, you may know very little about the legal aspects of setting up a business, devising contracts for your customers, or keeping the records you need for tax purposes. You can contract out most of these services at first, and then as you grow, employ the right people to do the things that you have no expertise and no desire to learn.

Fatal error #5: Not focusing enough on building a brand and trust

A lot of young entrepreneurs see people like Mark Zuckerberg and think that becoming a hugely profitable entrepreneur can be accomplished very quickly, without much thought to things like building trust and relationships with customers, and to building a brand awareness that is supported by those trusting relationships. This is simply not true. No business makes it without customers who trust you and your brand.

The solution: Today, most businesses should have a strong Internet presence, and they must focus on the needs of customers and potential customers first, before they even think about profits. Building your brand awareness and your reputation as someone who can be trusted means that you listen to your customers, you respond to your customers, and you solve their problems.

Don’t succumb to impatience for profit’s sake. Build slowly by developing a trusted brand and solid relationships with your customers. They will ultimately spread your brand for you.

Fatal error #6: Not hiring the right people

When you reach a point at which you will be employing others, you can pat yourself on the back. You have grown and your income will now support additional team members. Some of the burden will be lifted from you; you can have permanent help where before you had to contract it out.

It will really be critical to get the right people into the right spots on your team. Unfortunately, many millennials succumb to the temptation to bring friends on board, the assumption being that they will be just as enthusiastic and will do whatever it takes to help you be successful. Big mistake.

The solution: Carefully, design each job with a description, including the skills that team members must have. Look for that person and do not hire until you find him/her.

The takeaway for millennial entrepreneurs

Millennials are an interesting and unique generation. They have a new approach to how they want to work and lead their personal lives. Being entrepreneurs would seem to be an ideal work life for them.

If you are one of these millennials who sees entrepreneurship in your future, you can be successful if you patiently pursue your success and avoid the big errors.