The idea of starting your own business can be quite a rush, especially in the age of ubiquitous startups. As a first-time founder, the urge to make your company a great and successful company is certainly high. But the new business and startup game is quite a challenge to say the least.
Statistically, over 50% of new businesses in the US fail past 5 years, and around 33% of them survive past 10 years of operation. And most of the time, it’s not the idea that’s bad – it’s the implementation that fails. How do you beat the odds?
Here is some trusted advice on the biggest startup mistakes many new founders make to avoid them.
Jump with the gun without testing the water
Every business idea is only as good as its implementation. Once you have an idea of what your business will look like, it’s time to test and validate the hypothesis. Social media is a very powerful tool for new business owners or founders – you can interact with your target audience almost directly.
Use your social channels to spread the word about your business idea and see how people react. Does it attract the people you hoped would? Is the problem you want to solve resonating with your audience?
Once you’ve got this initial feedback, you’ll have a clearer picture of where your business fits in the market. And all of this before you build your company or startup.
Lack of a clear direction for your business to grow
Once you have a goal set for your business, the best thing to do is to make sure that you have found a way to get there. This is where a well-designed business plan comes in.
You need to be able to measure your company’s performance week after week. And for that, you need to set your short term and long term goals. The goals are your yardstick and help you optimize your work in order to achieve them.
A strong business plan is important before starting a business. When you start building such a business, things like cash flow needs, growth factors, the practicality of doing business, etc. become more apparent.
Having a clear direction will help you find the right path and stay on the right path. Of course, business plans change as the brand grows, but there still has to be one to act as your guiding principle.
Scaling up before you’re ready is the most common startup mistake
Once you see positive sales and a few strong quarters, it’s only natural to think about scaling up. But in the eagerness to scale, many founders burn their money and investments in hopes of reaching their goals faster.
Most founders believe that scaling up also means scaling up team sizes and hiring more full-time employees. Most of the time, you just need extra help getting on with daily tasks so you can focus on getting more sales and getting the growth you want.
Much of the income and investment goes into hiring non-critical roles that you can easily outsource. Wouldn’t you rather spend less on hiring costs, paychecks, training, 401,000, benefits, office space, etc.?
A great way to get around this expense is to: hire a remote worker instead of putting someone on your payroll. And no, that’s not the same as being a freelancer. Working with a freelancer is usually pocket-friendly, but it also comes with a lack of accountability and quality assurance.
Put less focus on a strong marketing plan
A smart company or startup needs a strong marketing plan to do this. You have your idea, business plan, and even your team ready. But without a marketing plan that gets you in front of the right audience, you’re working with a handicap.
You need to know how to pursue your first user and scale to your millionth user. Think about which channels your perfect audience is using to consume information and target them. It is always good to conduct quick experiments to understand the strategies with the best ROI.
Make plans on how to acquire your leads, how to convert them into paying users, and how to turn them into avid customers. And an enthusiastic customer brings you more and more sales – through his own continuous business with you and also through the recommendations he generates through word of mouth and network.
You need to plan the entire customer lifecycle and have ideas on how to keep them as a customer. Since it is far cheaper to retain one customer than to acquire a new one every day.
Forget to focus on customers
Once you’ve gained momentum and confirmed that your idea is now a viable business, don’t forget your customers. Every leadership decision you make must be made for the benefit of the customer, not the customer’s disadvantage.
Always focus on what the customer wants, not what you might want. The easiest way to do this is to simply look at your data and listen to what your customers are saying. Can you realize the intended use of your product or service? What are the subjects that they express? What can be changed to improve your offer for them?
Incorporating a feedback loop that constantly gives you vital insights into your customers’ needs is an investment that is sure to pay off.
Not delegating enough can be the start-up mistake that will cost you
As a founder of a startup, it seems natural that you have to do everything and wear the hats of all roles. However, this is counterproductive to your ability to grow with stability and persistence.
Focus on the critical business goals and problems, not the details of day-to-day operations. That’s what you have the rest of your team for. Trust them to get their job done, especially since you may have put significant effort into hiring their talents in the first place.
Micromanagement is your greatest enemy – avoid all costs. Because, in addition to being a founder, you are now a leader for the other people on your team.
Another great way to delegate is to work with a Remote Employee Marketplace. This gives you an advantage – both in terms of cost and operational efficiency. For such a service, you only pay a subscription fee and it takes care of everything. And the advantages are easy to see –
- fully trained professionals, ready from the start
- Support anytime you need it
- faster talent acquisition
- Customize it to meet the specific needs of your company
… to name a few.
Bad financial planning is a big start-up mistake to beware of
Unless you are a serial entrepreneur or if you come from wealth, you will rarely have the luxury of taking risks when it comes to your earnings and your capital.
The way to ensure that you are smart with your capital resources is to ensure proper bookkeeping and financial planning. Track every dollar in and out, analyze your cash flow and budget efficiently. Don’t spend more than you have to, and definitely not more than you can.
Make sure you are constantly tracking your company’s financial health. Be aggressive about your revenue generation goals but conservative about your expenses once you start generating them. Your North Star should always be profitability and not other vanity metrics – no matter what anyone else might say.
Are there any other mistakes that we may have missed? As a founder, what experiences have you had with startup mistakes? We’d love to hear all about it from you! Leave a comment or write to us.