Last updated on July 1, 2020
15 Mistakes to Avoid When Starting a Business Many business startup start with enthusiasm and flair but they fail each year, with not so many reasons. Almost all companies studied have common reasons for their failure even before beginning to pick up. They fall into the trap over and over again but if they could avoid these business startup mistakes, their chances would significantly improve.
15 Mistakes to Avoid When Starting a Business According to the data provided by the U.S. Bureau of Labor Statistics, 20% of new businesses fail during the first two years of operation, and roughly half of all businesses don’t survive past the fifth year. So how do you successfully launch and run your startup?
These are the 15 Mistakes to Avoid When Starting a Business, this article will help you avoid them.
1. Lack of Preparation before Startup
Whether it is a Marathon or competition or start of the new beginning, if you have no training and warm-up, you will not get success. It is very important for you to warm up with some prelaunch training. You should have requisite skills and knowledge of the work you intend to start. Before starting out take some good rest, have nutritious food, and make sure you have prepared and everything is organized and in place. Any business startup requires hard work, focus, dedication, and concentration and so no personal hiccups or professional turmoil may trouble you in your mission.
2. Don’t be afraid to fail
“The biggest mistake you can make is to be afraid of failure. Failure is key to your success, and jumping into your fear is very positive for your future business. How you pick up after failure and learn from your mistakes is the key to great success.”
3. Get organized
“Being organized is key. Running a small business is like being a circus ringmaster. It’s normal to have dozens of things happening at once. So, I have a daily task list, things that I need to do. And I list them by their priority. It sounds simple, but it works and makes me far more productive.
4. Skipping or Overthinking on your business plan
You have thought about the idea or a plan about your business once and you are sure it would work. But somewhere down the line, you are not able to decide about the resources you need to add or other things to incorporate. You are thinking over and over again on things you wanted to add or leave. Your lack of decision might leave a gap between what you have been actually thinking and in the final execution of the plan. Calculate all the pros and cons of the things you have made your mind on adding. Your estimated plan would help you in making the quick and right decision.
5. Understand your market and target audience
“A common startup mistake is not taking the time to understand the market or customers you’re building for. For technical founders, writing code can seem easier than talking to customers, but there’s no way to know if you’re on the right track unless you’re constantly getting feedback from current or prospective customers. It’s important to recognize that building a great product often doesn’t translate into a successful business. Many companies find themselves focusing on a market that’s simply too small to build a big business in.
6. Lack of focus, idea or research
u are starting your company or a new business but you do not know what you want, you do not have any idea what you want to achieve and where you want to reach. No work can be successful without any plan or idea, so before starting any businesses do your homework well, research thoroughly about each aspect of the business you want to do. Study the market, talk to the people who are already doing the same business and make out the complete plan of your vision, mission, objectives, aim, profitable goals or expected failures and any risks associated with it. Milestones have to be created to help you decide your business journey. Set a milestone of the year and a two and with the help of experts and accountant calculate expected production, sales and profit you can achieve and anticipated loss. Never lose focus but be flexible with the changes in the industry, market or conditions prevailing.
7. Don’t hire too soon
“By far, the biggest mistake a startup can make is hiring employees too soon, such as hiring full-timers when a part-timer might make more sense, or hiring an employee when a subcontractor could have done the same job/function. It is very easy to run a small business with part-timers, subcontractors and the services of other professionals.
8. Don’t waste money
“Handling money incorrectly and being irresponsible with cash flow is a death sentence for startups with limited access to capital. I’ve made the mistake of hiring too many people instead of the right people, and spending money to fill the top of the funnel without having a well-defined process to manage the bottom of the funnel. Putting good money to bad use and trying to be everything to everyone instead of being niche-focused is a sure-fire way to waste valuable time and money, which are the lifeblood to any startup.” –
9 Don’t give yourself the wrong salary
“Paying yourself too little or too much [is a mistake]. It’s often easier to determine the salary for a new hire than determining an owner or partner’s pay. Consider paying yourself a percentage of revenue. Whatever you choose, make figuring out your pay – and that of your partners – a practice and foundation to healthy expectation of management.
10. Don’t undervalue your product or service
“Don’t price too high, but don’t price too low just to gain market share. If you are good, price like it! Many entrepreneurs start with the best of intentions and give things away for free, or do free things for charity, community or visibility. Be very careful with this, because you don’t want to be known as a source of freebies. Ring the cash register first.
“One of the biggest mistakes startups make is launching before they are ready. The saying ‘done is better than perfect’ is the right advice, however, the ‘done’ needs to ensure it can handle new clients. Once you have launched into the public and you start getting clients, ensure that your systems and processes are in place, such as payment terms and process, contracts, communications, whilst still being able to maintain your marketing strategy. The back-end processes need to be watertight before you start taking on clients; if they aren’t, these are the cracks that will show and appear unprofessional.”
11. Don’t expand too quickly
“When you start to see success, it can be easy to assume that growth will continue, and the best way to make the most out of it is to simply copy and paste your working formula. However, if you … expand your business too rapidly, it could have dire consequences. You may find that your period of growth was only temporary, and end up stuck with a bunch of new staff but no work and no funds to cover them. That’s why it’s important to take a slow and steady approach to expansion, and never act on a spur of good results.” –
12. Implement a proper bookkeeping process
“Many startup founders begin without a bookkeeping process in place. Great bookkeeping habits help you make smarter business decisions, spot opportunities early on and head off problems before they become unmanageable. Understanding your financials helps to keep a pulse on your business’s financial health. Good bookkeeping practices also ensure that you’re on top of issues like tax and insurance payments that can get otherwise great businesses into trouble.”
13. Create a marketing plan
“If you have successfully validated the problem, market and idea for your startup, then you need to have a plan for how you’re going to get your first user, first 10 users, first 100 users, and so on. That’s where you need a detailed marketing strategy that encompasses the initial acquisition of users, the conversion of those users into paying customers, and making those customers so happy with your product that they help you get more users (through reviews, word-of-mouth, referrals, etc.).
14. Don’t hire the wrong people
“Different skill sets and backgrounds are needed for the different positions you’ll want to fill. When you get started, make sure you have hard-working, all-around generalists who can do everything you need them to [do]. When you begin to grow, look at hiring those who are specialized for the roles that need a specialist. Don’t hire a generalist when you need someone who is specialized, and don’t hire a specialist when you could hire a generalist to do it.”
15. Don’t over promise or under deliver
“Don’t overstretch yourself in the pursuit of revenue. It is far better to tell a potential customer that you can take on their project next month, for example, rather than take on too much. Not only will this save you from failing to meet targets due to an increased workload, but it will also make you look like you’re in high demand. And that’s always good.