We all know the statistics when it comes to startup failure rates. 50% fail in the first year, there are a multitude of reasons as to why, but we will look at the top 5 startup business mistakes and how you can avoid them.
Starting your own business is a risky venture. Going from employment, getting a guaranteed pay packet at the end of each month, that’s a thing of the past. You might not be able to pay yourself for months, or you might hit the jackpot. They’ll be days you feel like shouting from the hills how great running your own business is and there will be days when you dread getting out of bed and starting a new day.
With all this emotion and ups and downs there are many points where you’ll want to give up, but what are the main mistakes made by entrepreneurs and new businesses.
- Give up too soon – This is so common, during my coaching I often see entrepreneurs who have a great idea and a great product, they go to pitch it to a big time retailer and they get knocked back. They then think oh well if they don’t want it now then no one will and just give up. This is actually two mistakes. A) Giving up as we said but also B) A lack of belief in their products or services. If you ask any entrepreneurs or businesses what character traits an entrepreneur requires… they will almost all say ‘persistence’ and ‘belief’ without these you might as well have not started. The road to success is long and I will guarantee you now that all those super ‘successful’ entrepreneurs you look up to will have had more “no’s” and failures then those who failed. Which brings me onto my second point
- They don’t take risks – By that I don’t mean reckless risks, but I mean calculated risks, like attacking a gap in the market that your product will fill for fear of failure or competition. Business is risky, your customers could disappear overnight, your competitors could develop a product which makes yours obsolete, which is why we always need to be changing and analysing the environment to make sure that we take risks to stay ahead of the competition.
- Don’t know how to sell – This is important, as an entrepreneur you’ll be wearing many hats’ you’ll be CEO, marketer, sales, janitor, administrator, operations manager, negotiator, general dogs body and absolutely anything else that your business needs. But most importantly of these you need to be able to sell and to be honest there should be no one better to do it, you know your product best, you are passionate about it and those things rub off on other people and make it easier to sell to them! So why aren’t you out there doing it? I have noticed this practice a lot during my mentoring, an entrepreneur will start worrying about cash flow realise that there is absolutely no money coming in and will book appointment with a potential client then give an absolutely knockout pitch secure that 1 customer, get back to the office and then stop selling, if they did that constantly imagine how good their cash flow would be. So this is a warning, learn how to sell and keep selling. You are your product especially in the early days!
- Don’t Plan – This is a biggie! So many Entrepreneurs have a passion and a belief in their product, they have the drive to sell it, they have time and are raring to go, but when asked about the basics of their business they can’t answer because they haven’t planned. Now I am a big advocate of writing a business plan and this is whether or not you are looking for funding. It forces you to think about your business in a logical way and put down on paper exactly what you want to achieve and how you are going to achieve it. Although planning doesn’t necessarily mean just a business plan, not planning enough time for technology development, not planning for not enough startup capital, not planning distribution channels, not planning for growth. All of this can cause a business to collapse or more sadly not get off the ground in the first place. So Make sure you plan, plan and then plan some more!
- Growing too quickly – Businesses must be scalable; there is no point in taking on business if you can’t fulfil an order! This will only lead to complaints, unhappy customers and I tell you now nothing spreads faster through word of mouth than complaints! Especially in a niche market where there are few choices! You need to make sure that you can deliver exactly what it say on the tin, to quote a famous brand! If possible over deliver! Growing to quickly can be an absolute killer, so put support personnel and procedures in place that allow you to grow in a sustainable manner maintaining the quality levels you have set for your company.
So these are my top 5 startup business mistakes, there are many others like not being able to listen, not filling a niche, not marketing properly, but if you are sure to do the above 5 then you put yourself in the best position to give your small business a fighting chance.