20 Mistakes to Avoid when Starting your Business
2 ID Market, Organize, How much $$$, Plan, Legal, Get Help, do Mktg Plan, pick Investors, Pricing, Launching, Expanding, OK toFail?
Failure. According to the data provided by the U.S. Bureau of Labor Statistics, 20% of new businesses fail during the first two years of operation, and roughly 1/2 of all businesses don’t survive past the fifth year. So how do you successfully launch and run your Startup?
20 Mistakes. We reached out to hundreds of small business owners, growth strategists, financial advisors, legal experts, and business consultants to compile the 20 biggest mistakes that Startups make so you can avoid them when starting your business.
1. Determine your Market & Target Audience.
A common Startup mistake is not taking the time to understand the market or customers you’re targeting. For some founders, planning can seem easier than verifying the product or service. So as you develop your idea, constantly get feedback from family, friends, mentors, experts or even prospective customers. It’s important to recognize that creating a great product or service – don’t always mean success. Many Startups find themselves focusing on a market that’s simply too small to build a successful business in.
2. Now get Organized !!!
Being organized is key. Start a business is like exploring the unknown. It’s normal to have several things happening at once. So, create a To-Do list of what you need to do. And list them by their priority. Now you focus on what’s important and do thjem in the proper order.
3.Don’t under-estimate your $$$ requirements
Most founders are overly optimistic and think they can get further with less $$$. In an effort to minimize cash need, they forget to factor in unknowns, challenges or delays along the way. Startup founders tend to plan for the best-case scenario, which almost never happens. This mentality can be attributed to leaders’ overly optimism – since they think they have one of the greatest ideas ever. Excessive optimism some times causes challenges – from unforeseen situations. Then you may have to go back to the Wishing Well for more $$$.
4. Do you have a Plan?
Too many businesses start without a basic plan, and “If you fail to plan, you are essentially planning to fail”. A Startup should draft a plan, even if it is just one or a few pages (ie, Executive Summary) [I’ve helped >30 Startups with this] It should include your target market, it’s opportunity, how much it costs to start how long it will take to become profit, how you will survive tull then, etc.
5. Once you feel Confident about Idea, get Legal
The biggest mistakes that Startups make are not registering their business, picking the right business form or protecting their intellectual property. These three areas are crucial to a business starting right, where if not done properly, will cost valuable time and money to correct.
6. Don’t try to do everything yourself
A big mistake that entrepreneurs make is thinking they are all alone, and they try to start independently without looking for and using wise counsel (ie, a Mentor or Industry Expert). Don’t try to run a new business all by yourself. Find trustworthy, experienced Advisors to discuss your business ideas, strategy, challenges, & progress. Wisdom and proper Planning exist in the multiplicity of counsel. If you need to, incentivize a few people to join your company as Advisors in order to receive continuous feedback so that fewer mistakes will occur.
7. Don’t Hire too soon.
By far, one of the biggest mistakes a Startup can make is hiring employees too soon – such as hiring full-timers when a part-timer might make more sense, or hiring an employee when a sub-contractor could have done the same job/function.
8. Don’t hire the wrong people
Different skill sets and backgrounds are needed for the different positions you’ll want to fill. When you get started, make sure you have hard-working, all-around generalists who can do everything you need them to do. When you begin to grow, look at hiring those who are specialized for the roles that need a specialist.
9. Create a Marketing Plan
If you have successfully validated your market & idea for your Startup, then you need to have a plan for how you’re going to get your first user, first 10 users, first 100 users, etc. That’s where you need a detailed marketing strategy that encompasses the initial acquisition of users, the conversion of those users into paying customers, and making those customers so happy with your product that they help you get more users (through reviews, word-of-mouth, referrals, etc.). Put it all in you Marketing Plan & review it once a month.
10. Don’t Partner with the wrong Investors.
Investors should be more than just financial backers. A Startup’s first few phases of investors could make or break it. These individuals place their confidence in the business’s potential without having a proof of concept presented to them. Once a Startup has undergone their Seed Funding phase, they should look for investors who will help with the Startup’s growth & sustainability.
11. Don’t avoid Contracts
One of the biggest mistakes a business founder can make when starting a business is the failure to implement contracts. No matter how good relationships may be, they can come to a screeching halt when systems & agreements are not put in place and there’s a misunderstanding. Get it written down so everyone understands and agrees.
12. Don’t waste $$$.
Spending too fast can be a death sentence for Startups with limited access to $$$. Don’t made the mistake of hiring too many people – instead of the right people, and spending money to fill the top of the funnel without having a well-defined process to manage the bottom of the funnel. Putting good money to bad use and trying to be everything to everyone instead of being niche-focused is a sure-fire way to waste valuable time & money – which are the lifeblood to any Startup.
13. Don’t give yourself too much $$$.
Paying yourself too little or too much can be a big mistake. It’s often easier to determine the salary for a new hire than determining an owner, founder or partner’s pay. Consider paying each a small percentage of revenue at first – when you get past break even. Whatever way you & your Execs choose to figure out your compensation, make sure everyone is satisfied with it !!!
14. Don’t over/under-value your Product or Service
Don’t price so high you drive away Customers. And don’t price too low – just to gain market share – but not sufficient profit to survive. Do the research to determine $$$ of comparables, then price a little low and offer incentives to build your Market Share.
15. Don’t Launch too quickly
One of the biggest mistakes Startups make is launching before they are sufficiently ready. The saying is “Taking the risk of starting is better than waiting till it’s perfect” Even if you fail, you can learn something from it, that could help you in the long run. So do a Trial Launch on a small scale to test the waters. After your Trail Launch, you start getting bigger Customers, and start putting all your systems and processes in place – such as delivery, payment terms, contracts, etc. The back-end processes need to be refined & close to perfect before you start taking on big Customers. If they aren’t, then you could look incompetent & unprofessional.
16. Don’t Expand too quickly.
“When you start to see success, it can be easy to assume that growth will continue, and the best way to make the most out of it is to simply copy & paste your working formula. However, if you expand your business too rapidly, it could have dire consequences. You may find that your period of growth was only temporary, and end up stuck with a bunch of new staff but no work and no funds to cover them. That’s why it’s important to take a slow and steady approach to expansion, and never act on a spur of good results.
17. Don’t Over-Promise or Under-Deliver
Don’t over stretch your initial capabilities in the pursuit of revenue. It is far better to tell a potential customer that you can take on their project next month, rather than take on too much. Not only will this save you from failing to meet targets due to an increased workload, but it will also make you look like you’re in high demand. And that’s always good !!!
18. Don’t under-estimate the Demands of the Business
Articles & Blogs about Startups are making people think overly optimistically. This is because the info available does not highlight the hardships of starting a business, but it glorifies the end, which is a thriving business. Because of this, people think that a Startup is easy & fun, when in reality, it is quite the opposite. Startups take most of your time & money. It can even ruin relationships with Family & Friends.
19. Implement a good BookKeeping system
Many Startup founders begin without a BookKeeping (BK) system in place. Great BK habits help you make smarter business decisions, spot opportunities early on & head off problems before they become unmanageable. Understanding your financials helps to keep a pulse on your business’s financial health. Good BK practices also ensure that you’re on top of issues like tax & insurance payments that can get otherwise great businesses into trouble.
20. But don’t be Afraid to Fail !!!
“The biggest mistake you can make is to be afraid of failure. Failure can be the key to your success, and taking the risk is very positive for your Startup. How you pick up after failure and learn from your mistakes is the key to great success.
A successful Startup is not built by one single person alone. Surround yourself with subject matter experts & mentors you can lean on and learn from. Although there are several Startup mistakes you will want to avoid while building your business, occasional mistakes are inevitable, and manage your expectations accordingly. Don’t be afraid to take a risk – even tho’ it may lead to failure. Instead, learn from your mistakes and adjust your business as needed. Test new ideas and acquire feedback – so you can adjust your product or service -to better meet customers’ needs.
Comments: Any other Mistakes to avoid & How to?
from Biz News Daily 6/22 enhanced by Peter/CXO Wiz4.biz
For similar Info, click on Startup Advice.