The idea of kicking off your own business can be quite a rush, especially in the age of ubiquitous startups. As a first-time founder, the urge to make your business excel and succeed is bound to be at a high. But the new business and startup game is quite a challenging one, to say the least.
Statistically, over 50% of new businesses in the US don’t make it past 5 years and around 33% of them survive beyond 10 years of operation. And more often than not, it’s not the idea that is bad – it’s the implementation that fails. So how do you beat the odds?
Here are some trusted pieces of advice on the biggest startup mistakes that many new founders make how to avoid them.
Jumping the gun without testing the waters
Any business idea is only as good as its execution. Once you have an idea about what your business is going to be, it’s time to test out its hypothesis and validate it. Social media is a super powerful tool for new business owners or founders – you can almost directly interact with your target audience.
Use your social channels to spread the word about your business idea and see how people react. Is it attracting the people you hoped it would? Is the problem you are trying to solve resonating with your audience?
Once you get that initial feedback, you now have a clearer picture of where your business fits in the market. And all of this before even building out your business or startup.
Lack of a clear direction on how to grow your business
Once you’ve set a goal for your business, you should make sure you’ve charted a path on how to get there. This is where having a well-thought-out business plan comes into play.
You need to be able to measure your business’ performance week in and week out. And for that, you need to set out your short-term and long-term goals. The goals will form your benchmark and will help you optimize the work you to do reach them.
A strong business plan is essential before you start out any business. When you begin to build one, things like cash flow needs, growth factors, the practicality of running the business, etc. become more apparent.
Having a clear direction will help you figure out the right path and help you stay on track. Of course, business plans change as the brand grows, but there still needs to be one to act as your guiding principle.
Scaling before you’re ready is the most common startup mistake
Once you start seeing positive revenues and a few strong quarters, it is but natural to think about scaling up. But in the zeal to scale, many founders end up burning through the cash and investments in the hopes of reaching their goals faster.
Most founders fall into the belief that scaling also means scaling team sizes and hiring more full-time employees. More often than not, you just need additional help to work on the day-to-day things, so that you can focus on bringing in more revenue and generate that intended growth.
A big chunk of revenue and investment goes into hiring for non-critical roles that you can easily outsource. Wouldn’t you rather spend less on hiring costs, paychecks, training, 401k, benefits, office space, etc.?
A great way to bypass these expenses is to hire a remote employee instead of onboarding someone on your payroll. And no, this is not the same as a freelancer. Working with a freelancer is usually very easy on the pocket, but it also comes with a lack of accountability and assurance of quality.
Laying less focus on a strong marketing plan
A smart business or startup needs a strong marketing plan to go with it. You have your idea, your business plan software, and even your team ready. But without a marketing plan that can get you in front of the right audience, you are working with a handicap.
You need to know how you will be going after your first user and scale to your millionth user. Think about what channels your perfect audience uses to consume information and target that vigorously. It always serves well to run quick experiments to understand the strategies with the best ROI.
Make plans for how you will acquire your leads, how you will convert them to paying users, and how you will turn them into delighted customers. And a delighted customer always brings you more revenue – through their own continued business with you, and also the referrals they generate through their word of mouth and network.
You will need to plan for the full customer lifecycle and have ideas on how to continue keeping them as customers. After it is far cheaper to retain a customer than it is to acquire a new one any day.
Forgetting to focus on customers
Once you start gaining traction and now have validation that your idea is now a viable business, do not forget about your customers. Every leadership decision you take needs to for the benefit of the customer, and not to their detriment.
Always focus on what the customer wants, not what you might think they want. The easiest way to do that is to simply look at your data and listen to what your customers are saying. Are they able to realize the intended benefit of your product or service? What are the issues they are expressing? What can be changed to make your offering better for them?
Incorporating a feedback loop that constantly gives you key insights into your customers’ needs is an investment that has a sure-shot payoff.
Not delegating enough can be the startup mistake that costs you
As a startup founder, it might seem natural to think you need to be doing everything and wear the caps of all the roles. But that is counterproductive to your ability to grow with stability and consistency.
Focus on the critical business goals and problems, not on the minutia of day-to-day operations. That is what you have the rest of your team for. Trust them to do their jobs, especially since you might have spent considerable effort on hiring their talents in the first place.
Micromanagement is your #1 enemy – avoid it all costs. Because not only are you a founder, you are now a leader for the other folks in your team.
Another great way to delegate is to work with a remote employee marketplace. This puts you at an advantage – both in terms of costs and operational efficiency. For a service like this, you just pay a subscription fee that takes care of everything. And the benefits are easily noticeable –
- fully trained professionals, ready from the start
- support any time you need it
- quicker talent acquisition
- customize according to the particular needs of your business
…to name a few.
Poor financial planning is a major startup mistake to be wary of
Unless you are a serial entrepreneur or come from wealth, you rarely will ever have the luxury of taking any risks when it comes to your revenue and capital.
The way to make sure you are being wise with your capital resources is to ensure proper bookkeeping and financial planning. Track every dollar that comes in and goes out, analyze your cash flow, budget efficiently. Don’t spend more than you have to, and definitely not more than you can.
Make sure to constantly track the financial health of your business. Be aggressive on your revenue generation goals, but conservative on how you spend once you generate it. Your north star should always be profitability, and not any other vanity metrics – no matter what anyone else might say.
Are there other mistakes that you see happen that we might have missed? What’s been your experience in dealing with startup mistakes as a founder? We’d love to hear all about it from you! Leave a comment or write to us.