Your startup has a high chance of failure. There’s a good chance that it’s not going to reach its potential and you’ll be back working for someone else. This is the reality of the high failure rate among startups. But you can turn that around. The problem is most entrepreneurs have already failed before they open the doors of their company to the general public.
You need the right foundations in place before you start selling your products and services. This guide is going to introduce you to the critical mistakes that can cripple your startup before it ever gets off the ground.
No Product-Market Testing
Most companies will already have a product that they believe is going to make them into millionaires. But what they don’t have is any idea of how it’s going to sell. Product-market testing is essential for any new company. If you have no idea whether there’s a market for what you want to sell, you have taken a leap in the dark and there are no guarantees that it’s going to work out.
Prior to opening the doors of your business, you have to go out of your way to look and see whether there’s a market for what you want to sell. That much is clear.
Gather together a small focus group or look to your competitors as an example. If there’s nothing like it on the market, this could mean two things. It could mean you’ve hit upon a goldmine or you’ve gone down a path of failure.
No Business Plan
The business plan is something that every business should have. Without a solid business plan, you have no direction and little idea as to where you are going or how you are going to get there. It doesn’t have to be a master document filled with a step-by-step guide to business success.
You are always going to have to fly by the seat of your pants sometimes. The important thing is that you have a rough idea as to what you are doing and why you are doing it.
But even having a business plan can destroy your business. So many businesses forge one of these plans and then never update it based on changing market conditions. A strategy should be fluid and it should be able to be changed at short notice. Fluidity is the key to making this work.
No Handle On the Money
Entrepreneurs are notorious for having little idea about money. Most of them came from tech backgrounds, not financial backgrounds, and so the finance part of the business is either left to an accountant or simply becomes an afterthought. This is unacceptable because it’s your main resource. It’s the energy that drives your company forward.
You should know exactly how much money you have to work with and you should have a rough idea for how money is going to come in. In a study of 156 failed startups, CBS discovered one of the leading causes was entrepreneurs had no idea how they were going to make money.
It may not work according to plan, but at least, you can revise your expectations as you go along.
All startups must be independent if they are going to succeed. What this means is that you cannot be a startup that relies on outside funding to function. If your entire business plan relies on securing the support of a venture capitalist, your business has been built on foundations of sand.
It’s good to search for outside funding, but if that funding doesn’t come it shouldn’t mean that your company is unable to function. This is called betting everything you have on one outcome, and it’s a dangerous game to play.
Falling Down Before Getting Up
These four major mistakes are examples of how companies can fail before they even get started. So many startups have already seen their futures assured because they have not laid the correct groundwork before going to market with their products.
The sad thing is these foundations aren’t difficult to lay. All you need to do is have a rough idea of what the first six to twelve months will bring you.
If you have ever launched a startup before, you know how difficult it can be. With all this in mind, what are the top mistakes you think an entrepreneur can make when beginning a startup?