By Sarah Keith

24 August 2015 - 06:28

'Why rent an office if you can work from home, the library, or a café? Photo (c) Alejandro Pinto, licensed under CC-BY-2.0 A and adapted from the original.
'Why rent an office if you can work from home, the library, or a café?' Photo ©

Alejandro Pinto, licensed under CC-BY-2.0 A and adapted from the original.

Sarah Keith, who is working for social enterprise Startup Canada as part of a British Council exchange programme, looks at some of the common pitfalls.

The statistics around start-up failure are startling. It's been suggested that within the first 18 months, 80 per cent of new businesses fail. 

Starting a social enterprise, like any other business, is by no means easy. Sure, you may generate a lot of good-will – social businesses aim to have a positive impact on society and the environment – but you still need to think like an entrepreneur. Here are five common mistakes you should avoid at the outset.

1. Going it alone

Entrepreneurship is about starting your own business by yourself, right? Wrong. To be successful you need to turn to advisers, mentors and other entrepreneurs for help. There are networks and communities out there, such as Startup Canada, The Indus Entrepreneurs and futurpreneur, who can give social entrepreneurs the expert advice they need. By networking with other entrepreneurs, you can tap into their knowledge and first-hand experience. They have been where you are now and will have made plenty of mistakes, so you don’t have to!

2. Not knowing your numbers

You have a fantastic idea, enthusiasm and perhaps even a business plan. However, if you don’t know your numbers you won't get anywhere. Not many social entrepreneurs go into business to manage finances, but this shouldn't mean they get neglected. In a survey of 500 small business owners, Intuit Quickbooks found that 39 per cent failed their financial literacy test. Without a solid grasp of your finances, your idea isn't going anywhere. Intuit QuickBooks offers help managing accounts and Startup Canada offers finance boot camps, so you can learn to manage your finances yourself.

3. Waiting too long to get onto the market

In the UK, it has been reported that 55 per cent of start-ups fail in the first five years [Editor's note, 25 November 2016: source no longer available]. This is a sobering statistic for any social entrepreneur. Of course, you want to make sure you do all you can to avoid being another statistic, but is it possible to do too much? Planning is essential, but there is such a thing as too much planning. Sometimes it’s important to just get your idea onto the market and see if it sticks. You don’t want to spend years developing an idea to find that the consumer just doesn't want it. Try building what's called a 'minimum viable product' (i.e., a basic version of your idea) and get the feedback from there. This will help you test an idea continuously as you develop it:

4. Spending too much

Why spend your profits before you have made them? Entrepreneurs should use what is inexpensive or free! Why rent an office if you can work from home, the library, a café or even the park! Get a strong social media presence, use e-commerce platforms, which enable you to trade online, and find out what your government offers for entrepreneurs. A flashy office with plenty of swag may seem appealing, but is it really necessary at this stage?

5. Thinking too small

You want to be cautious and avoid running before you can walk, yes? Perhaps, but don’t forget that the global marketplace is available to you at the touch of your fingertips. We live in a world where you can go global from day one if you use the internet to your advantage.

Although the failure rate is high, you don’t have to be in that statistic. If you keep a level head and balance realistic expectations along with ambition, you will go far. Keep the passion and enthusiasm flowing and don’t give up!

Startup Canada is a grassroots network of entrepreneurs working together to build an environment for entrepreneurship in Canada.

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