Entrepreneurship can (most of the time) be a rocky and uncertain road. There are thousands of decisions to be made, sometimes with very little information. Not surprisingly, there are many ways that entrepreneurs risk making costly mistakes as they attempt to grow their startups. Even when the idea is fresh and has lots of potentials, complex situations arise that threaten the life of your startup. However, knowing the traps that threaten startups can help entrepreneurs avoid the all-too-common pitfalls.
Choosing the Wrong Name – The name of your startup can do a lot for your new company. It tells others what type of business you are; it helps with memorability and aids in discoverability. Upon hearing its name, people will immediately form opinions about your startup. A poorly-chosen name will most certainly be a distraction. In addition to this, if your chosen name is too similar to the names of other startups, or if potential customers find it difficult to spell, you could have a hard time being discovered. Finding the right name for your startup places demands on your time, patience and creativity. However, in the end, you will most certainly find it worth the effort.
Spending too much money upfront – A new business needs things. From furniture to computers to equipment, having the right equipment will help your business to perform at its peak ability. However, the danger lies in rushing to purchase all of your gear at once. There is the feeling among many entrepreneurs that they must have everything in place to compete. This is not true. Instead, purchase the essentials and upgrade as new and better equipment becomes necessary. Reserve the capital you do have to pay for other essential startup-building necessities such as networking and marketing.
Poor Marketing Strategy – New Startup owners are very often the victims of poor marketing strategies. This is one area in which owners should choose to spend some money. Entrepreneurs should invest in proper logo design, as well as a capable marketing team that knows how to represent your product correctly. A quality marketing approach will show your business in the best possible light and will help to raise the professionalism of your business.
Insularity – Too many entrepreneurs opt to work in isolation, plodding away at their tasks without interacting with anyone else. This is not healthy for creativity or motivation. Entrepreneurs should seek to surround themselves with as many driven and talented professionals as possible. Look for networking groups, volunteering opportunities and other activities that keep you connected to people and keep your creative juices flowing. There is plenty to be gained from fraternizing with like-minded individuals.
Underpricing your goods and services – Sometimes entrepreneurs try too hard to price their products and services competitively almost always to the detriment of their startups. Coming in at too low a price can have a disastrous effect on your business if the price proves untenable. Raising prices drastically on consumers can leave them feeling as though they’ve been taken advantage of by greedy business owners. While it’s a good thing to price competitively, startup owners must also reflect consideration the entire cost of doing things. This includes materials, taxes, rent, utilities and salaries and the myriad of hidden costs. Startup owners can also do a little sleuthing and see what their competitors are charging. Try to stick close to the average, but know that the more demand there is for your service, the higher the price you can command.
You allow too many distractions – Anyone who has ever spent a second on the internet knows that distractions are plentiful. There’s email which never seems to cease, and social media which is persistent with its notifications and never-ending scrolling. Distraction can place a terrible drain on your energy, enthusiasm and time. Startup owners should instead consider which of their goal-oriented activities is most helpful in allowing them to advance and spend as much time on those as possible. Owners should also develop a schedule that accounts for all their hours. Knowing that you have tasks scheduled makes it less likely that you will spend countless hours neglecting important duties and surfing the internet.
Launching too early – When it comes to launching your startup, timing is everything. If you start a product or service before it is ready, you risk putting out an inferior product that will show your startup as being unprepared or substandard. You risk creating a bad reputation for both you and your brand, and this can be devastating for your startup since you could end up alienating customers forever. Before launching your product or service, be sure to ask yourself, has my vision been fulfilled? Do people want this product? Is the product or service ready for heavy scrutiny? If your answer to any of these questions is no, your startup is not ready for launch. There is no greater harm done to a company that is rushing a poorly-made product to market.
Hiring the wrong people – Startup owners must seek to surround themselves with individuals who are smart, goal-oriented and are invested in your company. Too many startups have suffered the effect of bad hiring practices and were forced to cease operations. Sometimes startup owners choose to hire friends who lack the necessary skills and dedication. Sometimes a personality mismatch keeps the team from gelling. Hire workers who are competent and have the requisite knowledge and experience for their roles. Additionally, ensure that worker roles and compensation are clearly defined.
Getting a startup off the ground can be a challenging but rewarding task. There are many familiar pitfalls to avoid and a ton of wise decisions to make. However, you need not go into the process blind, and you need not make the same mistakes that others have made. Keep in mind that every mistake made by someone else is an opportunity for you to learn. The most important aspect in avoiding these mistakes is proper planning. It is much easier to prevent costly mistakes than rectifying them after the fact.Business & Finance Articles on Business 2 Community