The new year is approaching. Soon we will change the calendars on our tables, it is soon going to be 17 at the end of current dates mentioned. It is a great time to make some major changes in your business. One Internet brings a list of mistakes a start up must avoid in 2017 to make sure that the business runs smoothly in the coming year.
- Not prepping your life
You will never participate in a marathon, let alone winning it, right? The same truth makes sense for startups. Warming up for a good start from the New Year is a good idea. Have some prelaunch training, market research and learning about the experiences of the successful people in your field of business.
Talk to your friends and family, explain them that you are going to be quite busy in the coming times for business purposes. If they know the reality, they will be effortlessly supportive of your vision, and help you to concentrate on your business. Have a candid conversation to your closed ones in order to manage expectations.
- Confusing a product with a business
Remember that a product solves only an individual need, but a real concrete business offers something that makes customers come back for again and again.
Here is a way to make the distinction – Do you have potential revenue source beyond the initial purchase of a product by a customer. That’s a key factor that drives investors, who want to see the next thing and want to make sure that there’s longevity beyond the product/ service you are offering at the moment. It is a big concern for an investor to know the projection of future you have for your business, you must have answer for that and this will actually help you to determine if you even have a business at all.
- Not paying for expertise
Every part of a business needs be carried out like an expert. Each and every thing needs to be taken care of professionally. You or any one cannot be good at everything. That is not humanly possible.
Structure not only the company but also potential investments, because mistakes regarding investments can come back to haunt you.
So first, do not attempt to handle it all yourself. Find experts for every department who would know exactly what needs to be done so that there is no room for estimation or guess work.
- Ignoring data
Miracles do not happen in real, even if they do, you cannot afford to wait for them. Instead, you need to collect some facts and figures if you really want to succeed. Your data should validate that your big idea is real, or at least shows sign that it could becomes bigger in future. Once the data is collected, you should use it as key performance indicators or milestones to show the progress of your idea or business.
- Scaling too quickly
Here’s a scary number: Seventy-four percent of high-growth internet startups fail because they scaled too fast, too soon. (That’s according to a report by Startup Genome.) “It happens a lot,” says Erik Rannala, cofounder and managing partner of Los Angeles–based Mucker Capital. “People raise money, think they’re flush with cash and then spend it on the wrong things. But by the time they realize that spending isn’t getting them anywhere, it’s often too late.”
What are they spending on? Oh, anything — from marketing to hiring too many employees too quickly. But the basic problem is the same: They’re draining the budget on things that aren’t essential to expansion or determining whether their business is even viable. “When you start to spend money, you need to either have more or have a way to generate more,” Rannala says. “Because if you run out of money before you actually hit any real business milestones, you’re going to have a very hard time raising more.”
- Clinging to the wrong idea
“You have to realize that sometimes you’re pushing up the wrong hill or you’re pushing into a brick wall you’re never going to break through,” Rannala says. This mistake is especially prevalent among first-time entrepreneurs and people entering an unfamiliar market — folks who just fall in love with their original idea and can’t recognize how much it’s failing.
Don’t go on gut. Go on evidence. Evaluate how your product fits in the market. Maybe you run experiments on what tactics or product tweaks draw in customers the best. Or maybe you closely track how much it costs you to acquire each customer — and if small tweaks make that cost go up or down. “For consumer internet companies, for example, there are five or six tried-and-true ways to acquire customers,” Rannala says, “and if you try them for six or 12 months and none of those tactics are working, that might be a sign that there’s something wrong.”
- Failing to delegate
It’s perhaps the most classic problem in management: Rather than give up control and trust others to take the reins, you try to do everything yourself — and fail. The instinct is understandable, of course. “Most good entrepreneurs are very strategic, so they don’t want to have to worry about whether the fine details are being accomplished,” Holtzclaw says.
So, what to do? Delegate, obviously. Start by drawing up processes, almost like a guidebook for how to do things the way they should be done. That way you’ll feel calmer, and your employees will have the direction they need. “If you don’t do that, you’ll hire too quickly because you’ll think, I’ve got to bring somebody in because I’m so overwhelmed,” he says. “Well, if you’re overwhelmed and no one can take anything off your plate, you’re never going to get out of that state. You have to delegate.”
- Thinking money solves everything
Struggling entrepreneurs often think that if they can juuuuust raise another round of financing, their problems will be solved. But money doesn’t work like that. It can’t solve a fundamental issue with a business model, says Carter Cast, professor of entrepreneurship at Kellogg School of Management and venture partner at Chicago-based Pritzker Group Venture Capital.
“If your business model isn’t sound, throwing money at it is not going to work,” Cast says. “You have to fix the problem first, and then raise the money. Doing it the other way around will only get you in more trouble.”
- Underestimating how long sales take
Let’s get this out of the way: Sales take time. Many startups even think they can close a big enterprise account in three to six months — but in reality, a deal like that can take more than a year. And if your business plan doesn’t account for that, you’re going to be in trouble.
“They have to sell in to the c-suite, the line manager, the technology folks and the product manager. There are multiple levels of approval, and then there’s a scoping and discovery and implementation process,” Cast says. “I’ve seen many companies run out of money because they have been too aggressive in estimating their timelines.”
- Fearing failure
“Fail fast” may be a popular catchphrase, but Kamil isn’t a fan of it. No matter how much entrepreneurs may glorify failure, there’s still that scary word: fail. And nobody wants to be the opposite of success. “It’s really the wrong term, because ‘failing’ means there’s no benefit, and most times that’s just not true,” he says.
Change the mindset. You didn’t fail — you ran an experiment that will improve your next business. “It’s learning,” Kamil says. “Although it hurts a little bit each time, now you’ve learned something, and you can apply that lesson to move forward and make your business better.”
So, were these still 10 types of startup failures? Sure, technically. But that just means they’re also 10 ways to learn.