Though 400,000 startups are born annually, 470,000 close their doors. Read on to learn nine hiccups new startups can avoid.
New startups are popping up every day, and retiring to the startup graveyard at an even faster rate.
Though 400,000 startups are born annually, 470,000 close their doors.
Small, new startups are often scrappy and mistakes are inevitable.
Your goal as a startup founder is to make those mistakes mere bumps in the road rather than tragic accidents.
Here are nine hiccups new startups can avoid:
1. Getting Greedy
Dream big, but be reasonable. If you want to be the next Google, your office space shouldn’t look like it right out of the gates. Don’t blow your budget on luxurious office furniture and extravagant employee perks.
Instead, focus your capital on building the business. In fact, angel investor, Tim Berry says he doesn’t want to invest in a company that has nice offices, he’d rather see money spent on product development and marketing.
Remember: Amazon, Nike, and Apple were all small startups that began in garages.
2. Relying on Slow Internet
The one thing you should splurge on in your office: fast Internet. This guide will help you decide if you’re a light, medium, or heavy broadband user.
Even in a small office, the signal needs to be strong and service requirements need to be advanced. You will have a number of people uploading large files and making video conference calls, you can’t afford a connectivity issue.
Conduct a speed test to determine if your current Internet connection is right for your business needs.
3. Avoiding a Social Media Presence
You can’t spend all of your time and money on product development so there’s nothing left over for business marketing. Marketing is not an expense but an investment.
And in today’s online generation, it’s a fatal mistake to avoid social media. Though setting up social media accounts is free, maintaining them will take resources. You have to post consistently and engage others to garner a loyal fan base who will support your business.
Related Article: The Curious Case Of Startups: How to Spot the Failures and Successes
4. Being Too Self-Assured
Never assume you know what you’re doing. When you’re beginning a startup, you should take all the help you can get. Accept any advice offered.
Consider criticism seriously. Find mentors in your field. Network. And don’t get too high on the positive feedback from others. You should celebrate success, but there is always room to grow and improve.
5. Failing to Understand Your Market
An idea isn’t all you need to start a business. Before you launch a new startup, you have to perform your due diligence and complete the necessary market research.
You can’t sell a product or a service to a customer you don’t know, and you can’t solve a problem you don’t understand. Customer research is vital before, during, and after your product launch.
Before starting, test product ideas. During implementation, survey customers constantly to learn why they want to buy your products. After launching, continually adjust to what your customers want.
6. Hiring Too Soon
The last thing anyone wants to do is lay off employees. You need boots on the ground, but you may not have the capital to pay stellar salaries at first.
Startups that hire too early have a 146.7 percent chance of failure, according to study results. In your startup’s early days, you may want to consider hiring part-time or contract employees.
Or hire smart, young people on lower salaries, and offer stock or shares in the company.
7. Foregoing the Elevator Itch
If you want to land investors and consumers, you need a clear, value-driven elevator pitch. This business foundation will outline what you’re selling and how your business differs from your competitors, without using meaningless buzzwords.
According to Forbes, “One of the biggest mistakes an entrepreneur can make … is to goof up his or her startup pitch.” You’ll build your business culture from this pitch, attract investors, and motivate employees.
It’s something you’ll use over and over again, so you need to nail it.
Related Article: 5 Mistakes That Will Sink Your Startup And How to Avoid Them
8. Investing All Your Money
You’ve pledged your heart and soul to your startup, but you must be reasonable about investing all your savings, too. The business climate is volatile, and your well being matters, too.
The business should be working for you, so give yourself a reasonable salary. As part of your business plan and personal financial plan, you should be accounting for your salary in addition to overhead when tallying business costs.
9. Avoiding Contracts
No matter how small your business is, no matter how close of a friendship you have with a subcontractor, always sign contracts. This is an important layer of protection you will need should something go awry.
And during your startup’s initial stages, you can’t afford a costly legal mistake. “Written agreements are indeed an investment, but I promise they will save you one down the road,” advises Bettina Burgess, an employment and labor law attorney.
She says startups must secure shareholder and partnership agreements, employment agreements, and intellectual property agreements.
Transforming a new startup into a thriving company doesn’t happen overnight.
Avoid these mistakes and you won’t be another sad statistic, but the next great entrepreneur.