No pilot intentionally sets off to crash. But each flight is a potential crash, if pragmatic steps are not taken to avert it. The take-off stage of the flight is very important because it determines if the aircraft will gain stability to complete the flight or not. This exact scenario applies to start-up businesses.
A budding entrepreneur’s first steps are very critical to the success of the enterprise. You can tell if a start-up will sink or swim by its initial steps.
Aside from being focused, determined and hardworking, a budding enterprise should avoid the following pitfalls.
Lack of structure
This has to do with start-ups not filing for a proper legal structure. In other words, not registering the business with the Corporate Affairs Commission and obtaining relevant certifications required in certain lines of enterprise. You must also take steps to protect your intellectual property.
These are vital to the business starting right and where, if not done properly, will cost valuable time and money to correct. In some instances, you are detained in endless litigation and eventually frustrated out of the business.
Not having a sound business plan
Never join the school of thought that believes in getting funds before making the plan. It is a recipe for disaster and putting the cart before the horse. Many entrepreneurs have squandered huge funds on failed businesses because of poor planning.
Worse, deposit money banks have lamented that too many businesses take off without a basic plan. Note that if you fail to plan, you are essentially planning to fail.
In fact, a sound business plan is a magnet for funds. There are many development finance institutions that have been created to fund start-ups once your business plan is bankable.
According to Deacon Hayes, founder, of Well Kept Wallet, a start-up should map out a business plan, even if it is just one page. It should include how much it costs to operate, how much they anticipate selling, who would buy their product and why.
Don’t be disorganised
This is very vital. Keep track of your business always. Tara Langdale-Schmidt, founder, VuVatech, says running a small business is like being a circus ringmaster. It’s normal to have dozens of things happening at once. So, have a daily task list, things that you need to do, and list them by their priority. It sounds simple, but it works and makes you far more productive and focused.
Not understanding your market and target audience
Do not do things simply because others are doing it. This is a common start-up mistake. Many delve into areas where they have scant knowledge of the workings. Take your time to understand the market or customers you’re building for. Carve a niche for yourself and determine where you have a comparative advantage. 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.
According to George Deglin, co-founder and CEO, OneSignal, many companies find themselves focusing on a market that’s simply too small to build a big business in.
Scared of failure
Fear screams, what if I fail? But courage asks, what if I succeed? Always go for the latter. Failing as a start-up does not necessarily mean the end of your business or investments. It is how you utilise the lessons learnt that matters. As a matter of fact, failure is key to your success, and daring your fear is very positive for your future business.
Running a one-man show
Trying to do everything yourself is a wrecker. No man is an island, just as a tree cannot make a forest. Do not think you are alone and, while trying to be independent, have room to cross-pollinate with the right people. You need them to intelligently synergise, strategise and get their advice; especially from those that have gone before you. Learn from their pitfalls.
Finding and onboarding like minds in your business is a step towards avoiding man-made failures. Wisdom and power exist in the multiplicity of counsel.
James Zimbardi, CEO, Rent Items, captures it this way: “Incentivize people to join your company as advisors in order to receive continuous feedback so that fewer mistakes will occur.”
Partnering with the wrong investors
“An important piece of advice that entrepreneurs should know before starting a business is that their investors are more than just financial backers. A company’s first set of investors will make or break it. These individuals place their confidence in the business’s potential without having a proof of concept presented to them. Once businesses have undergone their seed funding, then they’ll interact with investors who look at the business’s growth and sustainability,” said Krish Subramanian, co-founder and CEO, Chargebee.
“One of the biggest mistakes a business owner/entrepreneur can make when starting a business is the failure to implement contracts. No matter how good relationships may be, they can come to a screeching halt when systems and agreements are not put in place, says Michelle Colon-Johnson, founder, 2 Dream Productions
Hiring too soon
“By far, the biggest mistake a start-up 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,” said Joseph C. Kunz Jr., CEO, Dickson Keanaghan.