Starting a new business and keeping it afloat is certainly not an easy job. There are plenty of startup pitfalls you must avoid.
While some business owners manage to come up with an excellent concept and even read up on everything beforehand, they might still make a financial slip-up and fail within the first short year.
Then there are those who, on the other hand, keep a rigid eye on their finances but completely fail to understand the market they operate in.
You can do a lot, in other words, and still struggle to make it past the first 5 crucial years. By doing your research properly and avoiding these common pitfalls, you’re giving your business a fair chance in the race. And you might even be able to pass your valuable experience on to other startup-owners in a few years.
Here are the most popular ways for young businesses to fail spectacularly so that you can take better care of your business. We don’t always just learn from our own mistakes after all, as there are many mistakes of other people that we can learn from too.
Watch Out for These 4 Startup Pitfalls
#1 They run out of money
Let’s start with the most obvious one of the popular startup pitfalls: some business owners bite over much more than they can chew and it costs them dearly, in the end.
All that talk about keeping a budget and looking after it like it’s your first born child is for a good reason as this is by far the fastest route to closing your company’s doors before it’s even started to take form.
Ensure that limited company registration service, first of all, and give your company a healthy financial start.
Think about this long in advance of actually launching your business, if you’re still able to.
Most people need to take out a business loan and there’s is nothing wrong with this as long as you know for certain that you won’t miss a single payment.
Finding investors is also a good way to go. But many startups struggle with finding interested investors and they’re often left without proper funding at a follow-up stage.
Many new startups are choosing to avoid the expensive business loans by looking for crowdfunding instead. This is an excellent idea and could get you started a bit quicker but it’s particularly important that you have an easy-to-swallow business plan that makes sense to potential investors.
Another option is, of course, to bootstrap and avoid borrowing money altogether. You can ask your friends and family for help, for example, and give yourself an extra year to save up the kind of money you need to take off.
It will take a lot longer and be a lot tougher on your wallet, in the beginning, but you won’t have to worry about making any repayments to the bank once you’ve actually got the ball rolling. To many, bootstrapping is totally worth it.
Yet, however well you budget and even if you have an investor onboard right from the beginning, you could still run out of cash. That’s why you have to a strict eye on your business and make sure it doesn’t put all of its eggs in one basket.
Particularly if that basket should turn out to be a product that nobody wants.
Learn to turn away from an unpopular product or service before it’s too late and you’ve invested all of your money in it.
What kills a lot of startups, in the end, is falling in love with something that the market has absolutely no interest in.
#2 Not understanding the market
This one of the most common startup pitfalls is often connected to the one above in terms of spending all of their money on something the market doesn’t need. Yet, it runs deeper than simply overspending or cracking your budget, though, as proper market research is vital to every aspect of your business.
Unless you are solving a problem for your target audience, they won’t have an interest in your business and regardless of what it’s offering.
Keep in mind that you’re not looking to solve a problem that is interesting to you, as a person – you’re looking for ways to help the market with whatever issues they may have.
Understanding the market goes hand-in-hand with communicating an efficient business model.
You need to implement this problem-solving in every part of your model. Make sure that potential clients, customers, investors, and partners are up to date on exactly how your business is able to make their lives easier.
Try to think big as well. You won’t succeed if you’re only solving a small problem and you need room to grow and expand.
Make it scalable and continue to address further problems that your market may encounter, even after you’ve given them what they need to solve their biggest ones.
Providing doctors with a more efficient computer system to manage their patients is, of course, great if they need it. But increased efficiency may mean that they’re able to take on even more patients. That’s where your company needs to step up and show that you’re able to grow and think ahead.
Another point to this is that the service or product you’re offering has to be user-friendly. Especially in today’s world of rapid technology and a focus on convenience.
Your startup has to be fast to access, simple to use, and easy to understand. Otherwise, people won’t have as much interest in it as they could have had.
#3 The team doesn’t work together
Many startup owners realize the sad truth about their team when it’s already too late. They don’t work together and it’s ruining the company.
Keep this in mind as soon as you’re about to lay out the foundation of your business and make sure that you only invite team players with diverse enough skills to keep going.
Many companies, after they’ve already failed, point to the fact that they should have had a CTO from the start, for example. Or that they wish that the founder or manager enjoyed the business aspect of the startup as well.
Of course, it’s easy enough to cite what you wish you had back then and claim that the business would have been a raging success otherwise. But it’s a good idea to listen to this advice in order not to commit to such startup pitfalls.
You need to have team members and partners who balance each other out so that your business isn’t pulling in only one direction and to avoid the common startup pitfalls. At the same time, you need to make sure that everybody is working towards a common goal.
It is not going to be easy but, by getting it right, you are giving your startup the best possible foundation in terms of human resources.
#4 Poor marketing
Marketing comes in many shapes and sizes and is, as you very well know, vital to the survival of your business.
While you do need to look into the kind of marketing that is right for you, keep in mind that it’s expensive and you need to save as much money as possible.
Look into social media marketing, first of all. Leverage influencer marketing and team up with those influencers and try to talk to a few journalists as well about spreading the word.
You can easily cut the costs of that important marketing by doing some research first. Talk to your friends and family about doing some word-of-mouth, and only going all-out once you have a proper stream of revenue coming in.
As soon as you’re able to afford it, hire a marketing professional and let them take care of everything for you. It is so important to use the right kind of communication at the right time and you want to invest in this as soon as you’re able to.
Now that you are familiar with the most common startup pitfalls, you’ll be ready to do what you can to avoid them in your business.