Every budding entrepreneur hopes to become the next Mark Cuban, but, as the saying goes, only the strong survive. In fact, according to data from the 2024 U.S. Bureau of Labor Statistics, almost half of all businesses fail within the first five years. And nowadays, with increased digitization and soaring prices, even more can go awry.
So what can new entrepreneurs do to avoid becoming just another statistic?
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To answer this question, GOBankingRates went right to the source: seasoned entrepreneurs. Here are some of the pitfalls aspiring entrepreneurs ought to be mindful of when starting a business this year.
Neglecting Agile and Remote Work Models
According to Isaac Livne, founder and CEO of OurAssistants, offering remote and hybrid work models is absolutely essential for attracting a key component of what helps a business remains competitive: top talent. In the absence of remote work models, a business is missing out on access to a global talent pool.
Additionally, the business is depriving employees of the comfort and convenience they have come to crave in 2025 from at-home setups and the elimination of stressful commutes, making employee retention more difficult. While some may tout the importance of office culture, Livne said, “Entrepreneurs who require traditional work environments risk falling behind competitors that meet modern expectations in the workforce.”
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Doing Too Much Too Soon
Social media lends itself to comparison, which is why it can be easy to compare yourself to more seasoned entrepreneurs while forgetting they didn’t get where they are overnight.
“Entrepreneurs can often feel pressured to have the perfect website, every social media platform running and a full suite of services,” said Sophie Musumeci, CEO and founder of Real Entrepreneur Women. But, she cautioned, spreading oneself too thin leads to burnout, wasted resources and mediocre results.
Instead, master the basics before scaling. “Focus on one core offer and leverage one or two social platforms where your ideal clients are already active,” she said.
In the beginning, remember quality over quantity. In addition to being more sustainable for the business owner, this approach ultimately enhances customer engagement and increases brand loyalty.
Automating Too Quickly
Being more productive without feeling spread thin makes artificial intelligence (AI) and other automated technologies sound like a great hack for new entrepreneurs, right? Wrong. According to Brian Lim, founder and CEO of INTO THE AM, automating should be put on hold prior to reaching a certain sales volume.
“Remember, automation is a matter of scale,” Lim said. “As a new business owner, you have to gain a solid footing first. Be sure you thoroughly study your supplier options and that your team is equipped to optimize any tool before making substantial investments.” Otherwise, you could be wasting a lot of money on a poor business model.
Lim recommended first focusing on low-cost digital marketing and growing a local audience.
Underestimating the Importance of Relationships
Regardless of what year it is, Ben Johnston, chief operating officer of Kapitus, encouraged building a support system of family, friends, employees and investors all willing to help. As he explained, the first capital a new business owner raises could come from friends and family eager to see them succeed.
“Your first employees will be equally important to your success, and some of them may even be rewarded with equity for their efforts. As you grow, institutional investors can provide both growth capital and valuable advice to help the business scale,” he said.
Additionally, because the digital landscape is becoming more crowded and competitive than ever, real connections with consumers may be an essential driver of sales.
Skipping Market Research
With today’s rapidly changing landscape and evolving consumer behaviors, it’s important to “know your market like the back of your hand,” explained Adam Stott, founder of Big Business Events. “Who are your customers? What do they need? What’s the competition like? Launching a product or service without answering these questions is like setting out on a journey without a map — you’ll end up lost.”
Stott recommended using every tool available to conduct research and acquire real-time data. This could include industry reports, focus groups and Google trends. When Target opened stores in Canada, it failed to fully understand the Canadian market, per Medium. All its Canadian stores shuttered two years later. Always validate a business idea prior to investing too much time and money.
There is one word of caution, however. As Rytis Lauris, CEO and co-founder of Omnisend, explained, perfectionism has no place in entrepreneurship. “It’s okay to observe your competitors … but once you’re done with necessary research, act.” Don’t overthink.
Overspending
While it may seem like inflation is cooling, the rate is still over the Federal Reserve’s target of 2% and is expected to stay above 2.5% in 2025, according to Vanguard. This means the price of doing business is likely to keep climbing — and that’s before factoring in the possibility of new trade tariffs that may increase the price of imported goods, as well as a strong labor market perhaps requiring business owners to increase employee wages in order to maintain top talent.
This is why it’s especially important for new entrepreneurs to watch their spending and keep their cash flow in check.
“As much as possible, avoid unnecessary spending and consider adopting dynamic pricing mechanisms that can change with the economy,” Lim said.
Musumeci also discouraged overspending on shiny marketing tools and costly systems, which are unnecessary in early stages. In other words, budget for inflation and avoid extraneous costs.
Failing To Build a Brand That Commands Attention
Entrepreneurs not only should want to appear as the go-to authority in their field but also should strive to stand out. With today’s limited attention span and the bloated competition in the marketplace, an aspiring business owner should ask what truly sets their business apart that makes customers want to keep coming back. This can include unique offerings, socials and websites that are visually compelling, and/or a gripping brand story.
Rohan Nayak, co-founder and CEO of Pocket FM, encouraged focusing on emotional value — a concept better known as emotional branding, which builds connections with consumers by creating a sense of positive feelings and belonging. This tactic not only grabs attention but keeps it. Tapping into consumers’ emotions creates brand loyalty and, in return, huge profit margins.
Not Budgeting for Fraud Prevention
Guillermo Francisco Cornejo, co-founder and CEO of Riders Share, explained that if business owners run customer-facing businesses like retail stores or a travel agencies, they should take precautions against fraud.
Nowadays, fraudsters have become plentiful and sophisticated. “They buy identities and credit card information on the dark web, then they use it to buy your products,” Cornejo said. “When the real owner of the credit card reports the fraud, the business is responsible for the costs, not the bank or the owner of the credit card.”
For this reason, Cornejo recommended including a line item in a business plan budgeting for the cost of possible fraud and/or the cost of fraud prevention.
Being Rigid and Inflexible
In a world where technology and customer taste are evolving at lightning speed, a unique combination of opportunities and risks are constantly presenting themselves. And adapting is crucial.
“New technologies will allow business owners to reach broader markets and employ greater automation,” Johnston said. “However, the rapid dissemination of technology and ideas can lead to rapidly changing tastes and needs.”
Johnston encouraged keeping an eye on the future and not being afraid to pivot or adapt as necessary. The most successful entrepreneurs are those with the flexibility to adapt to constant change.
Failing To Write a Business Plan
A business plan is essential in order to figure out where a business is going and how it intends to get there. In order to find investors, it’s important to create a business plan with estimates on how much capital is needed to fund your business and its growth, Johnston said.
This plan also doubles as a checklist for a business owner in assessing any and all problems that could arise and any potential solutions. No one wants to find out they have a supply chain issue after their business has launched. It’s better to hammer out the nuts and bolts ahead of time.
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This article originally appeared on GOBankingRates.com: 10 Pitfalls New Entrepreneurs Should Avoid When Starting a Business in 2025
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
