Congratulations! It is very challenging to not only come up with an idea that attracts buy-in but to actually raise the funds required and launch your start-up successfully. Wow! That should surely be the most difficult stage, right? If that’s the case why do 50-90% of start-ups, in varying sectors, fail? Your own passion was most likely the key driving force in achieving success in that initial phase but, ultimately, it’s the keeping of all the wheels on during the actual performance of the ride that is vital to success and healthy growth.
Mistakes and challenges aren’t just made by first-time, new entrepreneurs. Let’s mitigate the problem business behaviors before you detour towards a dead-end. Here are four frequent start-up mistakes and how you can avoid them.
Not knowing what route you are going to take
It is very valuable to have a compass to help you find and stay on route once you have established your product, business model, and start-up funding source and have identified your potential client base.
Here are two tools that can help:
1. Create a Board of Advisors
This should be made up of people you respect and, more importantly, people that you can learn from. Think of 4-5 people that you can invite for a casual beer and pizza dinner every 2-3 months and come prepared with an agenda that covers issues you are having that would benefit from outside experience.
2. Create a Mission Statement
One of your company’s mission’s key role is to inspire and keep the focus of the goals of the corporation on track. For this reason, a company’s mission statement is often heralded as its motto. Your mission should help bring you back around to where and how you want to go if and when the wheels start coming off the bus.
Not keeping an eye on the cash
It is necessary to check your bank balance daily to not only ensure that there are no surprises, but to create a discipline of being on top of your cash demands and anticipate shortfalls in advance. This is a critical function of operating a successful business and is probably more important than your miracle product. If there is a lack of financial resources that you did not anticipate, and you lack the resources to solve them, you will likely crash.
Cash burn rates in start-ups are typically fast and often underestimated as you ramp up to build revenues and sales. However, it is even more challenging when you experience a fast growth spurt. Who would have guessed? Don’t forget that you actually have to pay those extra employees and production needs. Planning for cash needs during periods of growth is just as important.
Not dedicating enough energy to building great teams
There is no question that the best managed companies, whether large corporations or small businesses, understand that their strongest asset is their team. If you were smart enough to create this miracle product or service, you have to be even smarter to realize that you alone do not possess all the ingredients to make it soar. A truly excellent business owner or executive identifies strengths and weakness in abilities and traits and chooses the strongest candidates to deliver those skills. You might be the wizard of software development but how skilled are you with submitting the necessary evils of CRA submissions?
Once you’ve landed yourself a great team of support, don’t micromanage and allow your team to deliver excellence. Remember—working for a start-up is very different than the corporate world, so don’t forget to frequently show your recognition to your staff in more ways than just financial incentives.
Forgetting an obvious essential: Sales, sales, sales
You and your team are brilliant! In your mind, you have successfully created a life-changing product or service, but this is when plans really need to be followed through with.
For example, if you are a software company you may want to make sure your IP is locked down and properly protected, and while the thrill of success and creation is abuzz—has anyone thought about selling outside of your tech house? It can’t thrive if it doesn’t have that sales swing! This is when teams prove to be a vital piece of your company. Not all IT architects are capable or have strength in marketing or sales solutions. Plan these in advance to ensure you engage the individuals who can best deliver in this role.
Following this, take time to breathe and actually enjoy the ride.
Written By: Karen Behune Plunkett, Principal, Pinpoint Strategic Direction