Launching a new business is never easy. Whether you’re starting off with a lump sum of cash or starting with nothing, getting your business off the ground takes hard work and dedication. Overall the past few years, there’s been a rise in startup businesses and more entrepreneurs are taking the leap. With the aid of technology, creating a startup business is easier than ever—succeeding, however, is another story. To help increase your chances of a profitable, successful business, here are ten mistakes you should avoid.
Misunderstanding the Market
Half of all small businesses fail within five years. As each year passes, that percentage increases. The biggest reason these companies fail is because they don’t understand their market. Perhaps you didn’t do the proper research to really hone in or your target market, or perhaps made assumptions about what your ideal demographic wanted. Research isn’t enough these days; you’ve also got to go out and speak to your target market consistently.
Launching too Soon
Believe it or not, launching too soon can completely kill your business. In this case, you feel confident in your product or service, and then roll it out and learn that people don’t like it so much. Losing those early adopters could not only hurt your reputation, but set you way back. Instead of pushing too hard too fast, work on making a core product as good as possible, and then get to work on how to expand.
Choosing the Wrong Hosting
Every startup needs a website, and every website needs a host. Getting a host is simple, but choosing the right host and the right plan isn’t always clearcut. For example, some startups on a lean budget might decide to go for a free hosting, but there’s almost always a caveat here: chances are, your website will run very slow, and you’ll be left with a sitewide shutdown. Even paid hosting has some restrictions that could have a negative impact on your user experience. If you need extra bandwidth, be sure to look into upgrading your hosting plan.
Not Managing Finances
It’s easy to get lost in the expenses when you’re managing startup cash. But it’s important to remember that every dollar you spend is an expense, and every expense should be tracked. Having a thorough understanding of what’s coming in and what’s going out will help you make smarter decisions about how to use your budget.
Hiring Too Quickly
Once you get your startup up and running, and you’re gaining some traction, you might feel pressured to hire fast—but this is rarely a good idea. It’s important that you spend your money wisely, and one bad hiring decision can cost your business one-third of that employee’s salary. Take your time to continue interviewing until you get your hands on the right people. In the meantime, you can use interim management services to take advantage of qualified talent. You also work with a temp agency or hire freelancers.
Not Exploring All Financial Opportunities
Startups tend to be strapped for cash. However, before you run to the bank for that business loan, it’s important that you explore multiple different financial opportunities. Enter pitch contests to win prizes, apply for grants, and talk to angel investors. You might even consider taking advantage of the startup cash that startup incubators and accelerators offer businesses that join their programs. Each of these opportunities also offers additional recognition and networking opportunities.
Ignoring Company Culture
Company culture is so important in today’s business landscape. Startups are especially reliant on company culture to attract and retain talent. Think about your staff’s productivity and happiness, and how you can implement office habits to make your workplace an enjoyable one where people are excited to come into work.
Micromanaging the Team
As a startup founder, you might want to keep your hands on every aspect of this business. This is a big mistake that could lower company morale. Micromanagement makes a team feel as if they aren’t competent enough to make even the most basic decisions on their own, and instead of thinking outside the box, they’ll be trying to think about what would be best for management. As such, you could easily lose out on some valuable creativing thinking and the productivity of a staff that receives autonomy.
Forgetting About Customer Service
It’s not uncommon for new startups to be one-track minded: they believe sales is the end goal, and that those sales validate the company model. However, growing a customer base and nurturing them is key. If new customers don’t feel valued, chances are they won’t come back. And the cost of acquiring new customers is much higher than retaining your existing ones. Furthermore, by providing great customer service, you increase your chances of scoring great customer reviews, which are instrumental in attracting new business.
Raising Too Much Money
It’s more than possible for startups to raise too much money too fast. But of course it’s not the money that becomes an issue; it’s what’s done with the money. Once you receive funds from a VC, for example, the VC expects you to put that money to work quickly. This could result in making some rash decisions about the budget allocation.
Money also has the potential to change the entire dynamic of the office; once money gets involved, this is typically where office politics begin. This is why it’s so important for you to have a gameplan and candid, transparent conversations about the future of the business long before the money hits your bank account.