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Last month, I started a list of the most common mistakes made by newly formed startups. Starting a business is absolutely a leap of faith, so it’s important that you do as much as you can to set yourself up for success. Let’s go through a few more ways to avoid missteps while trying to build a healthy, strong, viable business.
This is applicable in every aspect of your business model. When your company is finally off of the ground, and it’s time to start taking on clients (or delivering goods), it’s vastly important to make sure that you can deliver on what you promise to your clients. Don’t take on a huge contract just because the money is good; make sure that you have the resources to follow through. The last thing that you want to do is have your first clients be disappointed; the news of bad business practices travels fast. Do everything that you can to ensure that your initial clients are beyond satisfied.
On that same note, be realistic about growth and spending. Younger generations are flying to opportunities that promise “startup culture”. There will not be a shortage of applicants looking for the opportunity to be a part of your new (potentially hugely profitable) company. It’s important to be mindful of your growth in terms of hiring. Also, try to avoiding stretching your budgets to offer “perks” like catered lunches and happy hours just to keep up with what everyone else is doing.
Find the Correct Investors
As startups begin to grow, it is not uncommon for cash reserves to start diminishing. As you start looking for your second round of funding, you’ll undoubtedly encounter several investors whose interest is piqued by what your startup has to offer. Before you make an agreement, and papers are signed, be sure that you and your investor(s) are on the same page. You want to avoid getting into partnerships where a common interest is mistaken for a common vision. Come up with agreements about expectations, and trust your gut. If you don’t think that an investor will align with your goals and expectations, it’s likely that they will not.
It takes a great deal of courage to take the plunge and open your own business. The startup lifestyle is a hugely rewarding one, and can be extremely lucrative if it is carried out correctly. But it’s also one of long hours, very hard work, and a lot of faith. As an entrepreneur and owner of a startup, the pressure is on you to make good decisions, as your livelihood (and the livelihood of others) quite literally depends on it.
The one thing that you want to do is avoid making the same detrimental mistakes that other startups have made in the past. The following pieces of advice will help you avoid making damaging mistakes early on in your startup’s life.
Make Sure Your Business Isn’t Too Niche
It is true that a niche project can be the ticket to a wildly successful business. The general thought process is that niche industries usually mean fewer competitors and a higher probability of making it big. But, the reality is that a truly good business model will always have competition. The true test is whether your product and business model will be strong enough to beat out the competition. Avoid making the mistake of starting a business with a niche so small that there is little to no possibility of long term growth.
Time Your Product (Or Service) Release Properly
Jonathan Wegener, founder of Timehop was quoted saying “”The biggest mistake I see is companies waiting too long to release the product.” This is absolutely true. Many founders and their founding employees get caught up in trying to release the perfect version of their product or service, and that can be hugely detrimental for their timeline. It’s important to take a step back and determine if the Minimum Viable Product has been created. If so, launch! All of the extra bells and whistles can be added on as your business moves forward; they aren’t important for your initial launch. Avoid wasting time and resources upfront; use your initial product to gain resources, a following, and investors.
Be sure to check back next month to see more tips to avoid the most common startup mistakes.