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5 mistakes millennial entrepreneurs make in business

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The New Zealand startup ecosystem is incredible. There’s no doubt that Kiwi’s are a bunch of talented people with some amazing ideas. Just look at businesses like Trademe, Xero, Archipro, and HNRY which were all started in little Aotearoa.

But then there’s also the other side. Where Kiwi’s with brilliant ideas have startups that die, because founders blew all the money.

It’s difficult to start a new company. Only a small percentage of new businesses that are created each year last for five years, and even fewer of those are led by young entrepreneurs. Business executives with management experience are more likely to launch a successful firm than first-timers, like many millennials.

However, there are certain benefits to being a millennial business owner. The generation is renowned for possessing creative thinking, drive, and enthusiasm, all qualities that can help create a successful business. The key is to avoid joining the 24% of failed firms that folded because of a lack of funding.

1.0 Managing cash flow poorly

A startup needs to handle its cash flow very carefully, especially in the early stages. The Association of Chartered Certified Accountants estimates that neglecting cash flow results in 82 percent of business failures. Unfortunately, a large portion of millennials lack financial literacy, which makes managing cash flow a major issue for a millennial-run company.

You simply have to keep an eye on your finances to prevent making this error. Look at the sources of every income and how it is all used. Create a method to keep track of everything, even if it’s only an Excel document. If you don’t, you expose yourself to problems like not knowing profit margins, lacking the paperwork required to attract investors, or theft that goes unnoticed.

2.0 Fundraising too much, too soon

Early on in a startup, it can be simple to spend a lot of time strategizing how to obtain funding from investors and venture capital organisations. Many fledgeling business owners view the quantity of money raised at the start as a sign of success. But concentrating too much on fundraising can hurt your company’s bottom line.

Spending all of your valuable time and effort on raising as much money as you can divert you from other, more crucial activities. For instance, millennials may become preoccupied with fundraising instead of developing sound company plans and meticulous marketing campaigns.

Remember that with proper planning, your business will be profitable. You can manage your firm with little to no outside ownership or management if your company is profitable. That is frequently far more valuable than having cash in your pocket when the race begins.

3.0 Being micromanagers

Young startup founders frequently strive to exert total control because they believe they are the only ones who fully understand their goods, services, and business strategies. Taking control of every facet of your financial planning, however, comes with the danger of burnout and can be detrimental to your performance.

Because many millennial entrepreneurs are somewhat inexperienced, it’s typically a good idea to receive feedback and advise on your financial strategy from an accountant, a financial planner, or a trusted local businessperson who has an eye for numbers. If not, you run the danger of ruining your startup by making bad financial decisions.

Hiring a person or group of helpers is an additional choice. Outside assistance can help you keep your head and your bank account in check as long as you communicate clearly.

4.0 Hiring the wrong people

Hiring weak team members, can swiftly deplete your resources and destroy your startup. You need to surround yourself with people who will have your back and occasionally save you from yourself. Be aware of the assets and liabilities that everyone you hire may bring.

Hiring the incorrect individuals results in enormous expenses. You must also pay for their training, hiring, and other associated costs in addition to their compensation. Additionally, underperforming workers reduce productivity and revenue. What’s the point if you aren’t getting a return on your investment?

Considering this danger, it may be alluring to work with inexpensive staff and consultants. Avoid falling into this trap because doing so can cost you more in the long run because they may be inexperienced or unreliable.

5.0 Investing in the wrong areas of their business

There’s no denying that the Millennial age is idealistic. As useful as this trait may be for developing novel company concepts, it may also come in the way of usability. For instance, many young business owners overspend on the creation of their new product or service but underspend on marketing it.

You miss out on a number of benefits, like user feedback, acquisitions, and customer feedback, if you devote all of your time and resources on trying to develop a prototype rather of going out into the world and selling it. You’ll squander time that you could be using to engage with your consumer base and discover what their true needs are.

There is no barrier preventing millennials from launching profitable enterprises. Innovation is possible in every field because to this generation’s passion and zeal. Young entrepreneurs can execute their ambitious ideas while avoiding financial problems.

Side Hustles NZ

Hey, I’m Rachel! I started Side Hustles NZ in 2021 with the goal of helping Kiwi’s start and grow small businesses in New Zealand. During the week you’ll find me discussing side hustle ideas in our Facebook group, working in my website design business, or riding my horses.

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