To become a successful startup owner, you need to identify what hinders you from succeeding. In this article, we highlight common mistakes startups make in running their business.
Mistakes in business are inevitable, but certain ones can lead to their complete downfall. Sometimes it only takes one wrong move to destroy something you’ve built up.
With companies filing bankruptcy due to the COVID19 pandemic, it’s even more crucial now to come prepared. You can’t afford to make mistakes. And to be the best in the business, you’ll have to prepare for the worst.
Why Startups Fail? Mistakes Startups Make Leading to Failure
There’s a lot of factors that can contribute to a startup’s failure. It can range from playing it too safe or placing too much at stake too soon. It’s usually a combination of wrong decisions and a lack of planning on the owner’s part.
As the saying goes, you can’t prevent bad things from happening but you can control how you react to them. A lot of startups have failed because they didn’t know how to respond to the crisis.
Identifying Mistakes Startups Make
Learning from the mistakes of others is the safest route to take. So, without further ado, here are the five common mistakes startups make:
1. Failing to Plan
A lot of startup owners skip the step of creating a real plan for their business thinking they can just go with the flow. While it’s true that the business plan will change based on the business’ growth and direction, it’s still important to have from the start. It lays out your business goals and how to achieve them. Your business plan serves as the blueprint of your business.
Here are the benefits of having a business plan:
Funding – You will need to present a business plan to convince investors to finance your business. To qualify for a loan, you’ll have to convince the lending party that you’re worth investing in. This means providing the paperwork that matches your great ideas. A business plan will deliver your idea in a professional, well-thought-out manner. A business plan can summarize all the crucial details of your operations such as your key financial statements and forecasts.
You can pitch your ideas to various private and public firms offering seed funding for startups, depending on your stage there are providers like PitchIn, MaGIC, Cradle, MDV, or MDEC that offer financial assistance.
Risk Management – As a startup owner, you’re signing up for a lifetime of uncertainty in running a company. The more your business grows, the more risks it’s exposed to. You can minimize these risks by reviewing your business plan and uncovering your weak spots. You can even conduct a GAP analysis or create a business contingency plan.
Expense Tracking – In the early stages of your business, you’re guaranteed to shell out a large amount of money to gain traction. This can be an intimidating task when you’re spending money without sure returns. A business plan allows you to confidently spend on the essentials because you can track the cash flow. You’ll figure out when you can expand and where you should cut down.
As you can see, a lot of the key factors of your business success rely heavily on your business plan. It’s your cheat sheet when it comes to managing your company. So, don’t wing it. If you want to build an empire, you’ll need a strong, solid foundation. Avoid the common mistakes startups make from the start.
2. Failing to set SMART Goals
Whether you’re running a small startup or a large enterprise, you need to articulate your goals. One of the common mistakes entrepreneurs make is not setting clear and specific goals. You can’t just settle with a vague idea of “making a profit” as your goal for your startup. You need to zoom in and focus on what the target numbers are, the scope of the market you intend to reach, and when to expand. This is where the principle of SMART goals comes in handy.
What does SMART stand for?
SMART stands for specific, measurable, achievable, relevant, and time-based goals. It’s your outline in identifying your business goals and how to reach them. By using SMART, you can brainstorm ideas and arrange them in a methodical process.
3. Failing to ask for help
It’s easier to reach the top when there are people to give you a boost. A lot of startup owners are under the impression that they have to go at it alone to succeed. But in reality, the most successful businesses are a team effort.
Running a business is a complicated venture and it can get overwhelming. Don’t hesitate to reach out to other entrepreneurs for assistance and mentorship. Surround yourself with experts in the field to learn about the best strategies in business.
4. Failing to leverage technology
With rapid advancement of technology, it’s drastically changed the way of trade. To adapt, you need to go where your customers are—online. A lot of traditional businesses failed because they didn’t adapt to the digital era.
You need to get with the times and take advantage of the new tools in the market. Whether it’s creating a new website, building an online presence, or simply modernizing your daily operations; you need to reap the benefits of technology.
5. Failing to market
No matter how great a product is, it’s only as good as the number of people who know about it. To thrive in a very competitive industry, you’ll need an edge over other brands. Marketing helps you broadcast your company’s best asset to lure in customers.
Contrary to popular belief, marketing isn’t at all that expensive. You can make use of social media and the likes to promote your business. It’s all about being creative and putting in the work to get people talking about you.
Avoiding Common Mistakes Startups Make
Now that we know what the common startup mistakes are, it’s time to learn what we can do to avoid them. And the biggest step to counter bad situations is to prepare for them.
Create a Plan B
The mistakes startups make are actually pretty easy to avoid when you’re prepared. On top of your business plan, you need to develop a plan B when things go wrong. A business contingency plan and a business continuity plan can serve as your emergency manual.
These are very useful to manage risk and recover as quickly as possible during a crisis. As previously mentioned, challenges are inevitable and it’s how you react to them that determines the outcome.
Develop Management Skills
Behind every successful startup is a founder who took all the extra steps to make it. Do some research on business success stories to gain some valuable entrepreneur tips. Take every opportunity to learn and never hesitate to ask for help.
And lastly, don’t go at it alone. It’s tough to take all the burden by yourself. Instead, you can enlist the help of experts who can guide you in navigating the journey.
This article is attributed to BT and FullScale, a company that helps businesses by providing access to skilled remote developers.