On average, 90% of startup’s fail.
To give your business better odds of survival, you certainly must do things differently than the vast majority of startup owners.
This includes avoiding common pitfalls
Here are the most common business mistakes to avoid and what to do instead.
1. Lacking Emergency Funds
Emergency funds cushion your business from cash flow problems which can paralyze operations.
Business always comes with a degree of uncertainty. From late payments to damaged stock. Your business still needs to operate amid this.
Cash flow issues can send your creditors after you, dent your credit score as well as put you at risk of foreclosure.
Depending on the structure of your business, you can also risk losing personal property as well.
To circumvent this, have an emergency kitty for your business. Also, go over budget on the projected capital and operating capital.
Outside your business, have at least six months of family income saved up before you launch the business.
2. Scaling Too Quickly
Yes, all entrepreneurs start their businesses with the aim of growing them. However, premature scaling is responsible for the death of 70% of startups.
Scaling should come about as a result of a businesses’ growth. When scaling is done to drive growth it becomes a source of trouble.
Startups need to focus on product development and gaining customer loyalty. In time, the business will scale organically.
3. Foregoing a Marketing Strategy
You have an excellent product. You intend to deliver stellar customer service. Your pricing is great as well.
Customers should troop into your store, right? Wrong!
Unfortunately, customers have no idea about your business. So naturally, they will not come looking. Your marketing strategy ensures you get people to your store or site (if you’re an online business).
This calls you to think about your online and offline marketing strategies, your audience and how best to reach them.
Think of ways to create a buzz leading up to the main launch, followed by a sustained marketing drive thereafter.
4. Doing It All For Money
Granted, a business has to be profitable to be rewarding.
However, making money the end all, be all is a gross mistake most startup entrepreneurs make.
When you are brainstorming business ideas, focus more on your passions. Look for something that will inspire you to wake up early and sleep past midnight.
You will literally spend every waking second at your business or thinking about it. Unless it’s something pleasant and that excites you, you will be in for a rough ride, and your business’s health will reflect this.
5. Going It Alone
You might start as a sole proprietorship, but this does not mean you have to do everything.
Going at it this way will wear you out as well as block you off from different insights and expertise.
Consider having a team around you be it a business mentor, a business consultant, an assistant or even a lawyer to help you with the legal set up.
If you do decide to partner up, ensure that your choice of partner is not only pegged on how much money they can bring into the business.
Try as much as possible to find someone that shares your vision for the business.
6. Making Hiring Mistakes
23% of small businesses fail due to the wrong hiring decisions. Granted, your business does not have a considerable salary budget when starting out.
However, your favorite cousin is not necessarily the best accountant. Nor is your sister the best marketer out there.
Take your time to get a reliable team in place.
You can make up the low salaries with performance-based bonuses, remote working opportunities, and a great work-life balance.
Hiring part-timers works out great as well. As your business stabilizes, you can then get full-time staffers.
Ultimately, you are your biggest resource. If you take on too much and burnout, you will lose your business.
7. Failure To Have Contractual Agreements
Going on verbal and gentleman’s agreements can leave you exposed if things fail to go as planned.
For this reason, strive to have legal agreements with employees, partners, suppliers and service providers.
8. Giving Technology a Wide Berth
New technology can be intimidating. However, the right technologies can save you time and money as well as streamline business operations.
Robbing your business of this resources is a disservice to your business and to yourself as well.
To avoid being overwhelmed, try simpler technologies for simple, minimal tasks and go from there.
9. Business Mistakes from Inadequate Research
Inadequate research leads to errors in anything from pricing decisions, picking the core product, business model or even marketing strategies.
As such, it is imperative that you carry out extensive market research, look and study other business model and have a great understanding of who your customer is.
With the correct information on your audience, you are able to create better-targeted marketing campaigns that your audience will respond to.
Remember that different strategies work for different businesses and industries. For this reason, focus your research to your specific industry.
If you’re going into the manufacturing industries, focus on that. If you are going into the transport industry, look at resources with that specific info.
Non-compliance with state and federal regulations is a slippery slope for start-ups.
If your business is cash strapped at inception, this is nothing compared to your financial position post-litigation or after settling non-compliance fines and penalties.
While the cost of compliance might seem like yet another unnecessary business cost, the cost of non-compliance can completely wipe out your business.
Find out the laws and regulations of your state including hiring, tax laws, safety regulations, and insurance as well.
An added benefit of compliance is that you are not constantly looking over your shoulder. You can focus your efforts on other ventures to stabilize your enterprise.
Have Your Wits About You
Starting a business is no mean feat. It almost feels like risking it all, without any guarantees of what your efforts might lead. It’s exciting, yet unnerving.
The beauty of it is that by exploring these business mistakes, you can avoid them and up your odds at a successful entrepreneurship journey.
However, first things first; is your funding in order? If not, check out our blog article on some sources of funding for startups.