By close of the year, most new businesses will fold up and cease to exist. According to U.S. Census figures, more than 200,000 small businesses closed between 2008 and 2010, and 3 million jobs disappeared. The numbers are staggering, and it could be more this year. The good is that, a lot more entrepreneurs are confident despite knowing the risks and as an entrepreneur, you should rather embrace potential failure than never try at all-great breakthroughs often require major risks. Some kind of startup mistakes cannot be avoided but can be managed.
One of the major causes of business failure is incompetence. No matter how perfect or great your idea is, if you team fails to manage the business, the idea will sink with them. It is not surprise that most investors invest in people and not just the ideas. It takes a great team to build a company that lasts. Show me a great company and I will tell you about the great leaders and team behind it.
The following startups mistakes have cost lots of businesses fortunes, some have been declared bankrupt in the process of business, others could not sustain investor confidence and yet others moved on to a new industry or idea.
1. Going into business for the wrong reasons
Every entrepreneur will confidently tell you of the great and legitimate reasons why he or she started a business, popular among them are: a great business idea, an urge to create something that can make a difference or a smart market opening. On the other hand if you want to start a business because you think you can quickly cash out and make fortunes in the shortest possible time, you will be disappointed. Businesses take time to scale and demands lots of time to get it right. Be prepared to work longer than even when you had a job.
2. Being in the wrong place at the wrong time
One of the best things about starting is that you can actually verify you idea before it hits the market. So you know if your idea is the right fit for the market or if its right time to start your business. If you are in the wrong business for the wrong reasons and you are hit by recession, you have little or no way out. If you start a business you are not passionate about and even the economy is booming, you could still not survive because you may not give it your all.
Identify what your passion, conduct a simple research about the market you have choosing, and be mindful of the market trends. Software- as-a-service has come to stay but for how long, online storage services are now recording subscriptions in huge numbers but businesses have huge concerns going forward, even though most of the companies have business continuity plans. Maintain an open mind in your business and adopt where necessary.
3. Underestimating how long it takes to scale
Most startups have a detailed plan on how they intend to scale, when they should start making profit, how many customers they could possibly have by the end of the fiscal year. They do the maths and it adds up. If fact some even massage the numbers to suit their expectations. But only time will tell what the real situation is on the ground. Mind you, your expectation will mostly be cut off and you will not meet your target. Your product may not even be ready by the end of the year. Make provision for unforeseen circumstances and you will not be surprised.
Other popular startup mistakes entrepreneurs are making include little or no marketing, going into business without a clear focus and spending too much money too quickly. Learning from other entrepreneurs’ mistakes is a great way to minimise what you get wrong. Think carefully before taking the plunge into any business, always make an informed decision and you will significantly reduce some obvious mistakes.