Startups are risky. Every step of the way, entrepreneurs are making decisions that can make or break their businesses. We here at Startup Jungle say this about entrepreneurs all the time: ‘Knowing is Half the Battle’. So here are the most common 9 startup mistakes to avoid when you’re starting up your business.
9 Mistakes to Avoid in your Startup
Knowing what to do is half of this philosophy. The other half is what NOT to do. That piece is commonly left out of instructions on how to run a startup. So, we’ve compiled 9 common startup mistakes to avoid in your business. You won’t want to miss these…
1. Failure to Plan
Effective and efficient planning diminishes waste of time and money.
Take the time to plan out the foundation of your business. It may seem tedious and pointless, but business plans are what you would present to future investors and lenders when you’re ready to raise capital. Also, putting together the business plan forces you to think about the aspects of your business that you wouldn’t think about otherwise.
Things like: Marketing plans, target demographics, competitive landscape, and even an executive summary that will serve as your elevator pitch! These are all things that go into effective and efficient planning.
2. Sweating the Small Stuff
It’s easier said than done. But learn not to sweat the small stuff. Don’t let the little things like’ how you’d need to add a second phone number to your business cards’ or ‘how you want to change your newspaper ads to show your spanking new tagline’. AKA: Don’t let the simple things distract you from looking at what really matters – making the cash register ring.
Expanding your business requires money – money that comes from your customers. Focus on your customers and how your business will be able to fill their needs. Because without them, you probably wouldn’t have to think of that new tagline anyway.
3. Wasting Capital
Business mistakes become more disastrous if it involves the sudden drop in your cash flow without noticing why, when and how it happened.
Prevent this by watching your cash burn rate and keeping a close eye on those purse strings. Budget EVERYTHING. Office supplies, lunches, extra goodies that are not necessary expenses, should all be on a budget. If you hit a budget on one of these luxuries, have the discipline to say “I’ll get it next month.”
This also goes with hiring your staff. Although you might be tempted to offer a “grand” promise for a salary increase for your new employees, or even hire additional staff as you go along, remember what you can afford to keep your capital runway long and lean.
Spend only on what is necessary at hand. The rest can wait.
4. Selling Yourself (and your Service) Short
You are full of potential, and your business–if conscientiously planned–is also full of opportunities.
The only problem is when you don’t believe it.
Undervaluing your products and/or services will prevent new customer acquisition. If you’re not walking in front of a crowd of people confident about your business, how can future customers or investors be confident enough to spend their hard earned cash from you?
On the flip side, overvaluing your product or service is just as slippery. Over promising and under delivering is a big a no-no when it comes to investors and customer retention. Make sure you strike a balance of confidence and realistic timelines and outcomes.
A great tip: know your competitors like the back of your hand. Know the ones that suck, the ones that are great, the ones that you HOPE TO BE IN THE FUTURE. If you’re matching or beating the competition in features or performance, you’ve got a lot to be really confident about.
5. Picking the Wrong Location
Where the people are, there your business should be. You must, must, must conduct demographic research for the location of your store, or the domain of your website (if you’re exclusively online). You must know the average income of your neighborhood, and find some target locations to spend a few days watching the foot traffic.
The last thing you want to do is sign a lease without research. Know the crime rate, know what’s nearby, and definitely get other people’s opinions and thoughts.
6. Not Believing the Bad News
Whether it is a bad review or a sharp criticism from your customer, always look at it as a reality in every business. Consider or reconsider what your customers or what colleagues say. Take things with a grain of salt, but never ignore the problems being brought to you.
The best way to gauge the health of your company is to keep customers happy and satisfied. This will keep them coming back for more, and spend more on your business.
Take feedback and criticism as an opportunity to improve, and pat yourself on the back when things do.
7. Doing it Alone
Being an entrepreneur is a lonely road, but it doesn’t have to be. Consider getting a partner or a mentor who can give you the good and bad news. Understand that you definitely don’t know everything, and enlarge your circle, reach out to others, particularly those who are known experts in the industry.
As a startup, you’ll benefit more if you listen to those who already have the wealth of information and experience in running a business. Ask questions and LOTS of it.
We touch upon over promising and under-delivering above, but it’s such a common startup mistake that we have to emphasize this again. Never advertise what you cannot deliver. Never advertise what you think you can deliver, but have not yet proven. Only advertise what you’re 100% sure about fulfilling.
It sounds easy enough, right? We couldn’t agree more, but time and time again we see this business mistake from a lot of entrepreneurs: promising what they HOPE they can deliver, and it’s never good news from that point.
9. No Flexibility
Another common startup mistake that we see from entrepreneurs all the time: Rigid to their original business plans. Yes, the business plan is fantastic in the beginning, but pivots happen all the time. If there is one thing that is inevitable in startups, it’s change. Changing products, changing vendors, changing services, changing features, changing things that make your business more profitable, changing focuses to maximize the lowest hanging fruit…all of these things require flexibility.
As with all of these business mistakes, it’s important to strike balance. Being TOO flexible is a mistake. Being too dependent on others is a mistake. Balance in life, and in business is key.
We hope that this article was helpful to you in avoiding the 9 common mistakes we see from entrepreneurs all the time. Have any questions? Did we leave any common startup mistakes out? Let us know in the comments below, and make sure you sign up for the 21 point business startup checklist.