AARP Eye Center
Many successful entrepreneurs agree that a good mentor can make the difference for the success of your small business. According to the Small Business Administration, 70 percent of mentored businesses last longer than five years. That's notable because, in general, 30 percent of new firms don't survive more than a year.
While getting a mentor may seem like common sense, there's a gap between knowing a best practice and putting that knowledge to use. Forbes indicates that 76 percent of people think mentoring is important, but only 37 percent currently have a mentor. Having a mentor increases the chances of success and helps avoid the costly mistakes of entrepreneurship.
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Avoiding common entrepreneurial mistakes
A lack of guidance for both new and veteran entrepreneurs can lead to costly mistakes, mismanagement and avoidable expenses. The common, costly mistakes a mentor can help your business avoid or mitigate include:
- Financial mismanagement. Understanding how to prioritize spending, cash flow and balance sheets can improve the financial health of a business. Why a mentor matters: A good mentor turns the focus to financial management for business growth. The small-business owner still has to do the research and manage finances, but relying on the mentor for guidance can make those steps more effective.
- Limited infrastructure. Implementing the right infrastructure can also improve the capacity and profitability of a business. Businesses that try to expand before having streamlined their systems can stumble into poor profit margins and inconsistencies with their products or services. Why a mentor matters: A mentor who has experience with business growth can be invaluable to the decisions required when expanding, such as evaluating future partners, employee credentials, growth opportunities and more.
- Unclear market strategy. Another avoidable expense is spending on marketing without first understanding who the customers are or what their pain points are. Trying to speak to everyone often means speaking to no one successfully. A targeted approach to connecting with customers often yields more visibility even though it may initially feel like too narrow an audience. Why a mentor matters: It's a myth that a mentor must have experience in an industry related to yours. The truth is that successful strategy and decision-making can be applied to any industry, particularly with regard to understanding and reaching the right customers.
Mentors can propel business growth
For a new business owner, a significant benefit of a mentor is the “knowledge transfer,” which is learning from your mentor's years of experience, failure and success without making the same detours and missteps yourself. For those who use their mentors wisely, business decisions including investments, scaling and team building can be made with confidence and calculated risks.
Mentorship has been a keystone to success for highly visible entrepreneurs such as Mark Zuckerberg of Facebook and Daymond John, AARP brand ambassador and star of Shark Tank. In a post on his LinkedIn blog, John notes that mentors don't always have to be high-profile people with prominent business success. He says one of his mentors was a small-business owner in Hollis, Queens, New York, who introduced him “to the fundamentals of business, whether that be inventory or how to deal with customers."
John also notes that just because you're running your own business doesn't mean that you have to do it all by yourself. Mentors can help. “I often think of myself as ‘self-made’ but that does not mean that there weren't people that helped me along the way,” he says. “Don't let your ego get in the way or think that you need to have all the answers. As long as the relationship is mutually beneficial, only good things can come from reaching out to others for help and guidance."