Running a startup company? Worried about its finances? Not sure about its future prospect? You are not alone then. Most startups go through the same journey and reverberate the same thoughts and experiences.
But there’s an alternative reality. Some startups (Very few in number) face less hassles running their organizations and arranging money from various sources. How come some are successful while others are not?
The successful startups are those who don’t commit the following mistakes:
Not taking feedback
This is a huge mistake. Feedback is an inevitable part of business. It’s more important for startups. They should have a stable system at work to collect feedback from their customers, from prospective customers and also from random people.
Most companies value customer feedback and they even employ online tools to aggregate reviews from happy customers, so they can brag about themselves.
Allowing random people to test a product and drop feedback may sound like a bizarre idea, but according to the speakers at the Product Hunt Singapore Meetup, feedback coming from random people is generally honest. Such feedback provides a brand with a retrospective look at their product lines.
Hiring considerations
The late Steve Jobs said at the time of hiring an older person, he looks for competence. It’s not that younger people are not competent, only there are some other considerations for them.
It’s “controversial” to link a person’s age with his value as an employee. But there does tend to be a link between age and one’s abilities with specific tasks. Take Millennials as an example. Overall they have more exposure and heavier usage of online tools, hence they usually have abilities and a wider range of skill sets compared to older team members. What the mature employee may lack in technical savvy, they make up for with overall experience.
They take away us… You put people where they will excel and best serve the organization. If your Millennial employees are tech savvy and strong at social media, and your more seasoned employees are not… make sure their skills match the tasks they are assigned. Don’t force a less experienced team member into a strategic or managerial position if they are not ready, and conversely, don’t try and force a less technically comfortable team member with ‘old-school’ ways to take on your social media endeavors.
Customer as the salesman
Ever think of this strategy? Probably not. But not making customers a part of the sales process is actually a big mistake, which, as a startup operator, you can’t afford to make. Startup firms typically don’t have enough resources. For instance, maybe they can’t engage 10 people immediately to handle the sales department.
But they can treat every customer like a special customer, so the customer later endorses them to others. This strategy was suggested by Jerry Murrell, the CEO of Five Guys. By applying this strategy startups can bring a significant change in the ROI. They don’t have to pay anything, only offer a winning product experience to their customers.
Studies indicate customer testimonials are more effective for startups than established brands. That’s because people doubt the authenticity of consumer reviews or testimonials if they endorse big brands.
Discarding strategies
This is another mistake that eight out of ten (cite this or change to “many” ) startup owners are guilty of committing. They often discard strategies quickly, without giving those strategies enough time to make a positive impact on sales.
There could be various reasons behind a strategy’s failure. The correct approach is trying to identify those reasons first. Make changes in the conditions surrounding the application of the strategy and observe if there’s any difference in the outcome. Sherlock Holmes used to do that to identify the culprit. Following his footsteps may help you identify the bottlenecks (If any).
In case there’s no external factor preventing the strategy to show its effectiveness, it’s the strategy’s fault. That’s when you can discard the strategy and apply a new one. Most startups don’t pass through these stages,as they are not willing to wait. Once they see a strategy is not bringing favorable return, they discard it.
Looking for cheap customers
Startups often settle for cheap clients, the logic they show may appear convincing, but in reality it is not. The truth is, startups are hungry for clients, so they don’t discriminate and settle for anyone. Since bootstrapped and low on resources, they couldn’t aim or wait for big clients.
But going after cheap clients has its downsides. First, cheap clients don’t pay much and a startup’s operational expenses are huge during the initial years. The majority of the money startups receive from their clients is spent on sustaining their operation. They couldn’t save much and their finances don’t grow.
Besides, when they work for cheap clients, they deliver low-quality work. It’s not that they deliberately keep the quality subpar. Due to shortage of fund, they can’t gather enough resources and the quality suffers. The worst part is many times clients don’t complain, and simply leave. When they happens, the startup is prone to continue the negatives that drove the client away.
Poor management
One reason that most startups fail is they couldn’t manage their firms well. Their approach to management is often wrong. On top of that, they couldn’t separate managing the company from managing its clients.
Client management is easier because clients want the work to be of high-quality and they want to know the progress of the work from time to time. But internal workflow management is an entirely different ballgame.
In many startup companies, the same person handles both duties, which is a mistake. Ideally, the two should be handled by different people. In case a startup finds it expensive to hire two people, the existing manager should be handling client management/internal workflow management duty and the remaining work should be handled by the owner.
Avoiding mistakes
The mistakes discussed here not only pull down a startup’s growth, but also prevent the company from assessing where it stands, in terms of growth prospect, financial stability and client satisfaction.
As startups avoid the mistakes, they find growth opportunities aplenty and gain reliable insights about themselves.
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