1. Failing To Prepare Your Life
The first step – preparing your life – is something that many entrepreneurs don’t think about, because they don’t understand the impact that a startup will have on their life.
Becoming a new business owner is challenging, tiring and emotionally taxing. You must make sure that all other areas of your life are running smoothly first. If you’re struggling with personal relationships, not getting enough sleep, or can’t keep on top of the things already in your life, you won’t get far.
2. Not Doing Enough Research and Planning
Starting a company revolves around having a big idea. But even if your idea is good, you can’t run away with it without doing in-depth market research first. Thinking of a product or service is the first step – you have to make sure it’s something people will actually pay for.
Do your homework. Find out whether there are, or have been, any similar products to yours. Did they succeed? Why or why not? You must understand your competition and know the market inside out for a chance of success.
3. Not Having a Real Business Model
So many entrepreneurs start a company with their focus solely on the product or service that they intend to offer. But it’s not all about your product. You need to make sure that you have a solid, realistic business model clear in your mind.
Think not only about what you’ll be selling, but how, and most importantly: why. Your business must have an ethos. You must have clear, achievable goals, both short term and long term. You must know how you intend to achieve these goals, too.
4. Making Mistakes with Hiring
Hiring people to help you with your startup is a tricky process. You must make sure that your employees share your vision, and are as excited about the startup as you are. Of course, potential employees must have the necessary skills and experience, but much more important is attitude. Don’t hire for convenience – make sure they’re the right fit for your company.
Just as importantly, think seriously about how many employees you need, and how many you can afford. You don’t want to put too much pressure on your employees, but you must think realistically.
5. Scaling Your Business Prematurely
When your business starts to take off, it’s easy to get caught up in the moment. When you start to earn money you might find yourself planning all sorts of ways to grow your company; renting a bigger office, hiring more people or branching out to different market areas. But don’t be too hasty – many startups fail because they scale up too quickly. If you have a good thing going, expand where you are rather than into different markets. So, for example:
- Take on more work from existing clients/actively market your business to find more customers
- Build better infrastructure like a better website, or start using a CRM
- Maybe make one or two hires, if it would help!
6. Poor Financial Planning
This point links in closely with the previous one. You must understand the value of your product: not only what it costs you to produce, but what it’s worth in the real world. So many people offer their product at too low or too high a price. Once you’ve gone down that road, it can be hard to come back. Make sure you have a realistic idea of profit in your mind, and understand the finances of your company from the inside out. And don’t try to do it all yourself – a reliable accountant is absolutely necessary.
7. Thinking Money Will Fix It
If you find yourself coming up against a problem, you must realise that money isn’t the answer to everything. You need to understand the root cause of your problem, and how to solve it properly. So many entrepreneurs think that throwing money at it will make it go away. If there’s a problem with your business model, acquiring more money to help finance it won’t solve anything. It might help things keep going in the short term, but it’ll put you in a worse position in the long run.
8. Having a Poor Marketing Strategy
Sadly, it’s not enough to have an amazing product. You have to know how to market it correctly. Advertising is the most powerful tool on the planet for breaking into the market – you must research this thoroughly, and know how to do it right. Pay close attention to design, as well. Having a professional exterior will really help your company succeed – just look at Apple!
9. Not Taking Feedback Seriously
When you bag your first customers or clients, ask them for feedback. But most importantly, take this feedback seriously. It’s easy to get defensive about your product and not be willing to listen when someone says there’s a problem with it. Don’t brush these comments off without considering them earnestly – there could be enormous value in them.
10. Being Too Resistant To Change
This is a big one: you must be willing to change your business model or product if necessary. Sometimes, the dream you have about your product will not tie in with the real world. If you need to change something to make a bigger profit or reach more potential customers, do it. Don’t cling to your original idea without any statistics to back it up.
There you have it: the ten biggest startup mistakes that lead to failure. Of course, nobody’s perfect – we all make mistakes now and again. But if you follow our advice, your startup will have a great chance of making it into the 10% of successful new businesses.