None of us are perfect, so we are all prone to making mistakes from time to time. But when it comes to your startup, there are some mistakes that could fast-track you into business failure. While it might be possible to learn from these mistakes and start again, your best bet is to avoid them in the first place.
Check out the following, and apply them to your business.
Mistake#1: Not shopping around for a business loan
There are all kinds of attractive offers from banks and other loan providers for business owners, but you need to take care. These people make money from the interest they slap onto your loan, so don’t be swayed by their sales talk. If you don’t actually need a loan to start your business, then don’t! You don’t want to be in debt at the outset of your startup. But if you do need to borrow, look for ways to alleviate risk. This includes looking for the lowest interest rates when you’re shopping around, benefiting from the help of an accountant to budget what you can reasonably afford to pay back, and/or considering an SBA loan. On that last point, you can read more here to weigh up the viability for your startup.
Mistake #2: Not having a business plan
To be honest, you’re unlikely to get a loan if you don’t have a business plan in place, so this is something you will be encouraged to do anyway. However, a business plan isn’t only a means to an end to secure financing, but a means to an end towards business success. Without one, you will be stumbling around in the dark, with no focus for your business. And if you have no focus, your business may not last for long. A business plan is useful for goal setting and alleviating risk, so to help you create your own (if you haven’t already), read this article to find out more.
A lot of failed businesses have one thing in common, they didn’t research their business plan. You might want to consider extensive market research before you proceed to write a business plan.
Mistake #3: Cutting costs in the wrong areas
You will be hit by a large number of business expenses, so being financially savvy, you may look for ways to cut costs. And this is fine, to an extent. However, you shouldn’t cut costs in the wrong areas, as you may damage your business if you do. We have listed some examples of cost-cutting on our website, so read our article and heed our advice. Then look low-risk ways to reduce your expenses, such as shopping around for cheaper utility providers, or opting for second-hand office furniture instead of purchasing something brand new, as these cost-cutting examples don’t pose any major risk to your business.
Mistake #4: Hiring too soon
You may not be able to run a business alone, but you need to be careful when hiring others. Outsourcing to other firms and freelancers may be more cost-effective in the short term before hiring employees in your business. You will only get yourself into a financial bind otherwise, as you will have wages, tax, and possibly pension funds to consider. This is wasted money, especially if you don’t have enough work for them to do. Be wise then, and only hire when it makes sense, and even consider hiring staff part-time in the early days, rather than full-time until you feel the need requires it.
Mistake #5: Misinterpreting the market
Marketing your business is a vital part of your business, but you need to know your demographic. While you will be keen to spread the word about your business to anybody and everybody, you will waste both time and money if you don’t focus your marketing strategy. You need to commit to market research, using the ideas here to narrow your marketing to those people who are more likely to use your product or service.
Mistake #6: Not researching the competition
You are unlikely to be the only business on the block offering the same product or service, so don’t underestimate your business rivals. When they get wind of your business, they will be doing all they can to beat you, as they will be afraid of losing their valued customers. While you may be averse to making enemies, you need to do the same. You may struggle to stay open in business, otherwise. So research the competition by visiting their websites, finding out what they do to win customers over to their side, and checking their pricing models. See what they are doing well, and consider the areas in which they fail. Invest in Market Research for product development and launch, so your business has an opportunity to flourish and not die in its early stages.
Mistake #7: Overspending
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We talked about cutting costs in the wrong areas, but overspending is another problem. This is something that many startup owners fall prey to, partly as an answer to our previous point because they want to be the biggest and best business on the block. However, if there is no income to balance out the expenditure, then financial problems will arise. So, don’t spend money on technology and equipment your business doesn’t need. As we have already suggested, don’t spend money marketing your business to everybody on the planet. And don’t waste money on anything that has little impact on your business, such as fancy décor for your office, or expensive lunches. If you do have extra money each month, put it into your business savings, as it’s better spent on growing your business and dealing with business emergencies, than anything that is superfluous or squanderous.
Mistake #8: Giving up too early
There will be challenges in your business. You will make mistakes. But don’t let them get the better of you. As we suggested at the beginning, learn from the mistakes you make, and don’t let yourself feel like a failure for making them. Meet challenges head-on, rather than fleeing from them. Running a business isn’t easy – you will experience bad days and hardships – but if you are passionate about what you are doing, then it would be a shame to quit if there is still hope for your business.
We hope this advice has been useful to you, but let us know what you think. And if you have any further tips for new startup owners, be sure to share your wisdom and experience with us.
Thanks for reading.
Featured image (source)