A startup is an exciting prospect for any young entrepreneur. The problem many startups have is that they can fall at any hurdle in their journey. Many startups fail, not just because they don’t have the right vision, but because they grow too quickly. Here are some of the biggest mistakes startups always make, and what you could do to mitigate these.
An Insufficient Business Plan
One of the most important aspects of any company formation is in the most embryonic stages. A business plan is the most important foundation because it doesn’t just help you to flesh out the most important parts of your business that can help you deliver a fantastic service, but it also helps you in relation to your finances.
Many businesses at the outset will get by with a simple Excel spreadsheet, but once the business begins to take shape and you start spending more money you are going to need a financial plan that doesn’t just make it easier for you to handle the incomings and outgoings, but also factors in the near future.
A business plan needs to have solid financial projections for, at the very least, the first year. One of the biggest reasons startups fail is because they run out of cash, arising from poor financial decisions.
Focusing Too Much on Marketing and Sales
Crafting a fantastic marketing strategy is critical, however, you need to make sure it’s not at the expense of worthwhile customer support. A growing business relies on its customers, and this is why you need to invest in the customer experience.
Startups can easily become blindsided by profit, and use this as the main focus of the business. Profit is a result of giving the right services to the people who need them the most. Your role is to offer something to customers that fulfil a certain need, which is why your marketing will help you to target those customers, but you taking their money for a product you are offering can make people assume that, once the transaction has taken place there is no sense of aftercare.
Small businesses have got to rely on their relationship with their customers. When it comes to the customer experience, you’ve got to go above and beyond in order to get those customers, and many organisations get to the point where they’ve done this all-important leg work but then view it as a non-essential task when they hit a certain point. Customer support needs to be at the forefront because this covers the buyer’s journey, and not just up to the point where they make the purchase, but beyond.
Not Building Relationships With Investors in Time
A startup company needs to show investors they have something tangible on offer, but the funding process for a new business can take months to go through all the iterations. You need to build relationships with your investors because they are the ones who are not just investing money, but their interest in the project.
It can be easy to hold investors at arm’s length and only update them when they are asking for something. However, this approach is not going to create a worthwhile foundation. Ensuring you keep the investors at your side throughout the entire process may seem like a lot of work, but this will reap dividends in the long run.
Underestimating How Long It Will Take to Get Up and Running
One of the common misconceptions businesses make during the initial startup phase is thinking that as long as they have enough of a financial buffer to get through the poor days, it is plain sailing. It is critical to have enough financial padding, which is why those who are chomping at the bit to give up their full-time job to be an entrepreneur need to think twice before they do so.
Anyone that’s working on their startup needs that time to ensure the pieces are in place, which usually hinges on specific financial sums. Once you think you have enough to cover the inception of the company, cornered the marketing, and the product development, realistically you need to add more because if you only budget for the things you need, something else will come up that takes you, and your bank balance, by surprise.
Not Understanding the Product’s Market Need
You can have everything in place, but you may not understand exactly who the product is for. A lot of startups think that they need to rush release their product and get it to market so they can profit sooner rather than later.
Many organisations make the mistake of timing it incorrectly; some companies take too long to launch by planning and researching forever, but others don’t do the groundwork to understand that this product will serve the business better if it caters to a specific market. Market research is critical, and understanding who the product is for, by drilling deep into engagement through time-honoured analytics tools is a very important part of the inception process. You can have a fantastic team on your side, but if your product is not solving a pain point in the market you are not going to profit.
Not Learning From Any Mistakes
The world of starting a business is exciting, and you can easily get carried away with everything. But if you do not understand how your product is solving a problem or you do not have insight into the bigger picture, you are going to run into problems.
It is an oft-used statistic that 9 out of 10 startups fail within their first year. These are some of the biggest mistakes they make. However, many people use the idea of starting a business as a way to escape from their current professional life, but if you are thinking that running a business is all about glamour and creating a life for yourself, it’s critical to ensure that you check and double-check everything that you can control. As exciting as leading a startup is, you still need to make a profit at the end of the day.