You’re going from sun-up to sun-down, running around trying to get all the details worked out, building your startup from scratch. It’s difficult enough to start a business, but launching a startup can really be a challenge.
Many entrepreneurs have very little experience in the business world, so when problems arise like managing the young enterprise, handling finances, and hiring employees on a budget, things can get complicated.
Any entrepreneur can make mistakes when running a business, but you want to be sure you don’t fall into these five common mistakes that startups make. Learn how to avoid them.
1. Not Enough Market Research
When you’re working on creating your product, don’t fall into the trap of thinking that your vision is the be-all end-all. You may have a brilliant product idea, but if it doesn’t solve people’s problems, it can’t be successful.
Don’t forget to get input along the way. Your users are your best advisors. Learn to read the market and follow what it tells you. The key is in conducting adequate market research to understand whether there’s even a market for your product at all.
As you’re growing, go to your customers. You won’t be able to make a good product without their guidance. Keep the 50% rule of traction in mind: Spend 50% of your time on product and 50% on gaining traction. Identify who you are trying to reach, where you can find them, and how they will react to your marketing activities.
2. Not Having Clear Vision
Many new entrepreneurs make the mistake of trying to dress up their product with so many features that they lose sight of the actual problem they were solving. They only wind up confusing the customer. Because a consumer’s attention span is small, you need to be crystal clear in what you’re offering. When you’re new on the block, make the first version of your product very simple and minimal.
Having a solid business plan is key for determining your future success. That plan should answer a few basic questions: What is the purpose of the company? Who are the potential customers? What are your mission and values? What is your desired direction for the company? Who are your competitors and what are they doing? How can the company measure success?
By making sure your goals are SMART goals, you can identify where you want to go and outline specific steps to get there.
When you’re stuck, refer back to the business plan, as it will help to determine your direction over the long run.
3. Lacking Ability To Bend
Oftentimes, strength can be measured by how something can bend and shift. Think of trees. The tall, rigid, sturdy ones are the ones that will break first in a storm. They’re too rigid in their stance. When the hard winds blow, the flexible, palm trees are the ones capable of bending with the gale. They are the ones that survive, not because of their hard strength, but because of their ability to be soft and adapt to change.
Par for the course, nothing ever goes as planned. Keep a backup plan in your pocket, but know when to be flexible when it’s time to bend. If you become stubborn or paralyzed, when something fails, you’ll stall out instead of adapting. Learn to fix problems quickly and change direction.
Continue to analyze the market over the course of time, monitoring what it is your customers want. Keep changing your product until they’re happy.
4. Hiring the Wrong People
Don’t start trying to hire in too quickly. Making that mistake could drain the enterprise financially, but at the same time, if you wait too long to hire in, you won’t be able to stay caught up with the swift growth. So you need to be focused on hiring the right people.
In the beginning, startups have very few people working closely together, long hours at a time. If there’s only three or four of you, then hiring the wrong person can really paralyze your company. While skills can be taught, figuring out the right people to hire can prove to be a little more difficult.
Set a culture code within your company. Seek your interviewees based on that code. Bring them through two separate interviews. The first round is to see if they would be a good personality fit with your culture. The second is to determine their technical capacity. You’ll be guaranteed to get great people that are a good fit for your culture.
5. Improper Handling of Funds
Without proper management and use of its finances, a new business may never set sail. Make sure that you have someone with good number sense in charge. If the business has to suddenly undertake a change, sufficient funds must be set aside.
Some new business owners feel that they need to spend a lot to purchase the best of everything from marketing help to equipment to software. Learn to create and stick to a business budget in order to curb overspending.
Once that first round of funding comes through, don’t make the mistake of sitting back and relaxing. Don’t let a false sense of security make your decisions for you. When you get to later stage funding, it takes longer to attract Venture Capital firms. Have your action plan for next round funding in place and ready to execute.
Everyone can make mistakes. The trick is to be aware of them and continue to work towards making smart, well-informed decisions in your business. There’s no need to reinvent the wheel, so reach out and learn from coaches and mentors who have preceded you in the mistakes department.