Countless start-ups fail in their first year, but barring a few industry nuances, the reasons why they fail are fairly limited. If you spoke to a cross-section of entrepreneurs who have had a business that folded, you’ll quickly notice that the same issues are coming up again and again. If you understand these mistakes, and make a point of avoiding them at all costs, your business will stand a much better chance of making it in a fast-paced and unforgiving arena. Here, we’ll look at four of the most common mistakes that can end a start-up just as soon as it’s started…
Confusing a Good Product with a Solid Business
In today’s climate, a lot of budding entrepreneurs have no problem coming up with a solid idea for a product, but after that, fail to build upon the idea and make it grow. A product will solve a given need, but a solid business will have something that customers will come back for, time after time. So, how do you make a distinction? Consider whether or not you have any potential revenue streams after a customer initially purchases a product. This is going to be a major factor when you’re trying to attract prospective investors, who will want to know how much longevity there is in whatever your brand is offering its target market. Take some time to think about where you’re planning for your business to be in three to five years. This will determine whether you really have a business on your hands, or simply a product.
Overlooking the Value of Data
Wishful thinking should have no place in your business plan. You can’t just think or believe that your idea is going to succeed. You have to draw on the relevant data sources, and crunch some numbers to determine if you actually have a chance of succeeding. Ignoring the potential of data is one of the most common start-ups marketing mistakes that causes potentially great business owners to crash and burn. Once you’ve collected the relevant data, you need to use it to create some KPIs and milestones that will drive your business plan forward. Aside from saving you from banging your head against a wall, reaping the right kind of data may also show you the potential in ideas that you may have had doubts about. If you don’t think that there’s enough of a demand from a certain demographic for a product or service that you’re toying around with, up-to-date consumer studies may show you otherwise. All your competitors are going to be using data to inform their decisions, so don’t leave it all to them!
Avoiding Paying for Expertise
Everyone knows that they’re not great at everything. However, if you want to maximize your chances of success, every little facet of your business needs to be handled with a competent degree of professional knowledge and expertise. This is particularly true when it comes to the tricky subjects such as taxes and legal compliance. If you structure your business in the wrong way, as well as any investments, it can really come back to bite you. Your resources may be stretched, but it’s essential that you know where to pay for the necessary expertise. In the most important areas, don’t find some free online guide and assume that you can handle the whole task yourself. Instead, reach out to an experienced professional who will know exactly what your next steps should be. Whether you do this through outsourcing or hiring full-time staff, this is one part of getting a business off the ground you certainly can’t afford to brush over!
Growing Too Quickly
Growth isn’t universally good. In fact, a large proportion of start-ups that fail in their first couple of years do so because they try to scale too quickly. It’s pretty common for a new business owner to raise a bit of capital, think that their business is bursting at the seams with money, and then spend it on all the wrong resources. Whether it’s hiring PAs or running marketing campaigns that aren’t going to appeal to their target market, the basic issue is always the same: business owners draining their available capital for things that aren’t essential to healthy expansion. When you spend money on scaling, you either need to have a cash cushion you can fall back on, or a view to gaining more money in the near future. If you run out of capital before you hit your big milestones, you’re going to find it very hard to raise more cash.
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