The Most Common Startup Mistakes

1. Insufficient Startup Idea Development: Most startups do not fail because the business idea is bad. The issue is that plenty of first-time entrepreneurs fail to actually plan the business before sinking money in to the startup. No matter how great a business idea is, it cannot succeed without detailed planning. Take the time to work through every angle of your business idea. Not only will you have a better grasp of how far your business can go, you will also reduce your risk and get ready to make the best decisions as you go.


2. Failure to Understand and Comply with Legal Obligations: An unbelievable number of entrepreneurs leave the legal aspects of business startup to anyone else or, worse, ignore them altogether. Finally this failure to comply with legal obligations will come back to bite you¦and the result can be devastating. Every entrepreneur must understand and secure all necessary licenses and permits, and set up compliance systems for taxes and costs due the local, state, and federal government.


3. Poor (or no) Promotion Planning: Promotion is the lifeblood of every business startup, and it is over business cards as well as a yellow pages advertisement. A lovely portion of your time and expense budget ought to be dedicated to promotion. Poor or no promotion equals no sales…equals business failure. Do your home-work before you launch to identify your target markets, figure out how to best reach them, and establish clear objectives and evaluations to make definite your promotion efforts are paying off.


4. Sales Forecast Errors: Establishing your preliminary sales forecast can be difficult, but there’s procedures you can follow to make it as realistic and correct as feasible. All often would-be entrepreneurs build a sales forecast around what they need to sell, than what they are likely to sell. While optimism is an excellent entrepreneurial trait, a optimistic sales forecast will leave you with serious funds flow issues and even greater difficulty in securing financing.


5. Poor (or no) Financial Management: Success in business is all about the bottom line, no profit, no business. Keeping the books correctly is half the battle. plenty of first-time entrepreneurs are willing to turn over complete responsibility for the books to somebody else — a hazardous decision that often leads to business failure. Reviewing and analyzing the financial reports is the other half. It is critical for every business owner to understand what the financial reports mean and how a alter in area affects all the others. Funds flow issues are also major financial management issue for plenty of startups in the earliest stages. Nice planning before launching a startup will clarify how much funds on hand your business idea will need to succeed. Whether you think about yourself a numbers person or not, as a business owner it is critical that you take responsibility for learning and applying basic financial management skills in case you need to succeed.


6. Under-Capitalization: Not beginning with capital to support the business through the preliminary stages is a common error. By thoroughly planning your idea, you will know how much capital you need to cover while you build your customer base, including working capital to keep yourself in ramen noodles until your business takes off. Nice planning will also increase the chance of securing investors, whether public (banks) or private (relatives and friends).
For example, business plan they recently reviewed appeared well-written and professionally laid out. However, the sales forecast reflected sales that necessary every member of the staff to bill out 19 hours per day, 300 days per year. Another retail business showed average total purchases at $230 each, although the average cost of their products is only $12. Assuming that each customer will purchase an average of 19 items each time they visit is unrealistic. Any competent investor will look for these errors.


7. Poor Web Presence: An effective web presence is an absolute must for any modern business. Basically posting an online site is not . In fact, uploading an online site without promotion it is like posting commercial copy only in your own living room, if your target market doesn’t see it, it might as well not exist. Lots of recent startups have crashed and burned because the entrepreneur thought that basically posting an online site to the net would drive sales. It won’t.


8. Leaving Critical Tasks To Professionals: Many entrepreneurs think that a nice suggestion and solid operations are to build a successful business, so they opt to turn over critical startup tasks, like promotion and accounting, to outsourced professionals. For some, the business side of business doesn’t interest them, so they pick to forgo learning the details of financial and promotion management. Finally, these choices backfire. In the event you don’t know how the money works, you cannot make the best decisions for your business. In the event you are not aware of the outcomes of your promotion efforts, you cannot exactly forecast sales and thus cannot plan for the future. It’s your business, you need to know and understand every facet from the beginning, or you might as well be working for someone else.


9. No Ongoing Planning & Review: As the actual operations of a startup take up increasingly of an entrepreneur’s time, it is simple to overlook the critical tasks of reviewing and planning. Every aspect of a company ought to be reviewed periodically, the financial statements and promotion plan. In the event you don’t know where you are or where you have been, it is impossible to know where you are going.


10. Lack of Patience – Pit of Despair: Every startup experiences a time period between being prepared to sell and actually building the sales. They call this gap the Pit of Despair because the entrepreneur is left wondering in the event that they have made the right decisions and whether the business is ever going to work. Lots of startups hit this point and the entrepreneur quits in frustration. Startups don’t usually succeed overnight. The Pit of Despair ought to be used to refine internal systems, work through free internet marketing techniques (participate in relevant forums, write and publish articles, build website content), and plan for the future of the business. Don’t let the inevitable delay destroy your chances of success — plan for it, expect it, and use the time wisely.
This entry was posted by Monday, 29 August, 2011