They say four out of five new businesses fail. Are there some common start-up mistakes most of them make?
The answer is ‘yes’!
Think of the new venture as a puzzle that you are putting together. Choosing a location, hiring staff and building a customer base is among the many pieces of the puzzle that you must assemble to build a strong business. Missing out on even a single piece will leave a gaping hole. Startup mistakes are high during the initial three years and often can cause your business to fail. Here is a list of warning signs that you need to attend to before venturing out on your own.
No business plan – The first piece in the puzzle is a business plan, without which you will go nowhere. While an idea is necessary to start a new venture, it needs to be thoroughly fleshed out in the form of a business plan to ensure that your enterprise starts off on a sure footing. A business plan forces you to think about your goals – and helps you find answers to questions like “What do I want to accomplish and how am I going to do it?” Remember that if you fail to plan, you are actually planning to fail. While a business plan is essential, remember that it is only a guide to help you through the process; it is not an end in itself. As situations unfold and priorities change, you can always go back to your plan and change it. The planning process is tedious and time-consuming but it will benefit you more than you could imagine. Not having a business plan is one of the most common start-up mistakes made by entrepreneurs.
Ignoring the internet – In today’s digital world, not having a website to promote your business is one of the other start-up mistakes you can make, and is as good as not having the business at all. A website can be a great marketing tool to spread awareness about your new venture. Ignoring it probably ranks very high on the list of mistakes to avoid while starting a new business. Also, acquire an email facility with your website’s domain name. This sounds a lot more professional than a free internet mail service.
Insufficient funding – The US Small Business administration (SBA) considers inadequate or ill-timed financing to be one of the main reasons why small businesses fail. Effective cash flow management will help get funds into the bank as quickly as possible. Do plenty of research to find the right financing option as there are many choices including angel investors and venture capital firms, commercial banks, SBA assistance, home equity loans, and credit cards.
Choosing the wrong business structure – The typical structures for a start-up business include sole proprietorships, general partnerships, joint ventures, limited partnerships, limited liability partnerships, and others. The decision you make now will have long-term implications, so consult with an accountant and attorney to help you select the form of ownership that is right for your type of business.
Not making time or effort – One of the key start-up mistakes you can make is not giving it your all. There is no quick road to success – it takes long hours, strategic planning and commitment. It takes a huge amount of time and effort to start a business and run it, particularly in the early stages. Be sure that you have what it takes to last the long haul. This is a HUGE start-up mistake and often made by people who follow ‘Get Rich Quick’ schemes
Improper or no research – Well, you have a great idea and want to start a new venture. Now, what??? One of the crucial mistakes that a new entrepreneur makes is to believe that he has the best idea ever. While your idea might seem brilliant to you, you have to see if the market is ready for it. Talk to people, read about the market in your area of business and gather as much information as you can before setting out. This will enable you to come up with a clear and focused business plan which is an essential ingredient for a successful venture.
Starting a new business could be a rewarding or thankless experience, depending on how you go about it. The key is to avoid making startup mistakes, execute well and stay focused on the goal.