With the rapid rise of technological innovation, it’s no surprise that entrepreneurs and tech experts around the world are rushing to create startups.
There are presently around 1.35 million tech-related startups internationally. While millions of people hope to establish a business ‘with legs’, not all startups are able to fare well — 90% are destined to fail within their first year, while 30% fail in their second year, and 50% by their third year.
The most common reasons startups find themselves on a downward spiral include an unsustainable business model, development issues, lack of investors, and cash flow problems. This might not be a secret to those who have business experience, but for aspiring entrepreneurs who need some guidance, here are a few mistakes to steer clear of:
A lack of goals
1. No clear business plan or SMART goals
Some ideas seem so promising that entrepreneurs rush into them with excitement — however, enthusiasm alone won’t necessarily translate to a thriving business. Rushing headlong into ventures with little planning might cause success to be either elusive or very short-lived.
Not only do good business plans include short- and long-term plans, they also provide businesses with guiding goals that are SMART: Specific, Measurable, Attainable, Realistic, and Time-bound. A thoroughly prepared business plan is essential to help startups navigate the rocky road to success.
2. Hasty efforts to raise money without a clear plan
Not having a concrete plan can be a turnoff for investors. Who would want to invest in something rushed and not thought through thoroughly? Creating a comprehensive business plan should also include being able to draw up projected finances and anticipate which areas of the business you’re planning to allocate funds to.
This will not only show investors that you’ve got a realistic grasp of how you’re going to run your business, but will also give you a better idea of how much you need to earn or acquire in order to successfully grow and stay in operation.
3. No Plan B, C, D, E, F…
It’s a simple fact of life: not everything will go the way that you’ve planned it. Instead of faltering and losing momentum the first time that things don’t go your way, you can instead take a second to breathe and refer to the next plan, or the one after that, or the one after that!
From economic downturns to daily operational mishaps, it’s better to be safe than sorry. Having not just one, but several backup plans can help you prepare for any emergency that your business might have to make it through.
No awareness of competition or customers
4. No consideration for competition
Conceptualizing a good product or service often stems from real-life problems that entrepreneurs and innovators see in their daily lives. When you see something broken that you can’t fix, why not just create something entirely new that can address or even eliminate the problem?
While a lot of our best ideas can come from wanting to create solutions, part of creating a good, sustainable solution is being able to look at what’s already being done about it. What are your competitors doing that you need to do better?
What kind of edge can you offer that others can’t? You’ll need to learn how to measure up against others and develop your product or service after observing how things are already playing out in your industry and community.
5. No consideration of people’s changing needs
Customer needs are always changing — what someone might need now might not be what they need tomorrow, which is something that only gets truer as time goes on, as technology continues to evolve and influence how we live our daily lives.
Development of your products and services doesn’t stop after you complete your business plan, but rather is a continuous effort throughout the span of your operations, in order to provide the best possible quality of offerings. Businesses that fail to listen to what their consumers need and want put themselves at risk of becoming irrelevant to their target market.
6. Not properly keeping track of expenses
Mismanaged funds are a fast track to the road of failure. Whether intentional or unintentional, not keeping track of even “the small purchases” you make can lead your business not only towards closure but into peril for potential illegal activity. Depending on how many people are involved in the mishandling of funds, things can quickly turn fraudulent if expenses aren’t properly recorded and kept track of.
7. Poor budgeting
Budgeting issues are also a major problem: when entrepreneurs put too much into one area and leave next to nothing for another, it can be hard for a business to achieve dynamic development. Particularly in the early years, money doesn’t always come easy for startups, so each budgeting plan should be thoroughly planned and realistic. Being able to evaluate which areas need a certain amount of funding can help a business grow exponentially.
8. Not investing in marketing
One of the biggest possible mistakes that an entrepreneur can make is underestimating the power of marketing. Having a good product or service can be worth very little when people don’t actually know about it! Depending on your target market, you and your marketing team should know how to best capture the attention and develop a relationship with the people you want your product or service to benefit.
Whether it’s curating social media profiles, creating ad campaigns online, or drawing out a traditional marketing series of print ads and commercials, you should know when and how to speak to your customers.
True enough, the world of business can feel intimidating — it’s certainly difficult to get it right on the first try. Entrepreneurs can feel tempted to throw in the towel when the going gets tough, but keeping yourself well-informed and in tune with the needs of your business and target market can help you stay on top of your game.
A little preparation can take you far!
Entering the world of business doesn’t have to feel intimidating at all. If you’re in need of inspiration, look no further: take a page from the book of startups set to become the biggest tech companies in New York City and see what you can do to up your game!