A lot of numbers get thrown around when talking about the startup mistakes that lead to business failure. According to the US Bureau of Labor Statistics, one out of ten businesses fail within the first two years, and another four within the first five. Only a third of them will still be there after ten years. It is important to know this, and more important to understand why this happens. Here are the 10 most common startup mistakes and how they impact young businesses. You can learn about them and how to avoid them to give your startup a fighting chance.
1 – Passion
Passion is key to business success. Passion is what fuels the entrepreneur to keep going past the honeymoon stage where dollar signs are on the horizon. Passion is how you know you love what you are building and can make the sacrifices necessary to see it through. If you don’t have passion, you are going to burn out fast. If you are in it only for the dollar profits that you anticipate and have to grind through everything in between, hindsight will reveal opening as one of your startup mistakes.
2 – Planning
You can have a bunch of plans laid out, or even just in your head. The important aspect of this is who is doing the planning and how it is being done. Planning must consist of both short-term and long-term goals and how to get there. Not having both views in mind and the time and tenacity to apply solutions along the way is a recipe for failure. You have to be able to envision where your business is going to be in the next 3 months and the next 3 years. If not, you will not have the measurable goals and results that will carry your business through that time frame. You need specific lists of actionable items and dates for implementation to survive the growing pains.
3 – Leadership
Many businesses fail early on because of poor leadership. Leaders who fail to make the right decisions for the business or who avoid making decisions at all are the bane of any startup. There are a lot of decisions to be made, especially when getting a business off the ground. Leaders must have strong management skills for all key aspects such as marketing, budget, human resources, sales and operations. And they must also know what to do about the nitty-gritty of it all, or at least know when they need to hire expert help to get it all sorted out. We get into this below.
Poor leadership trickles down and infects every part of the business, rotting it from the inside. Good leadership starts with knowing what you don’t know and taking steps to learn it – beginning with what a leader needs to be responsible for and personal development to improve less than awesome character traits.
4 – Unique Value Proposition
One of the most cringe-inducing startup mistakes is the copycat mentality. Just because that guy across the street is making a killing selling product A, it doesn’t mean you should go out and do the exact same thing. You need to find your own niche in the market – or carve it out! You need your own segment of consumers with money in hand. If you go after people whose budgets are already earmarked for a certain product from a certain guy, your potential profit is cut in half from the get-go. And who’s to say you’ll do even half as well as that guy? With a unique value proposition, you can distinguish yourself and your business and really make a mark that will matter to your bottom line. Copycats end up on a one-way street that leads to a dead end.
And one more thing, when you do uncover your uniqueness, make sure you are communicating it through your brand. It is not going to have the power to push your business forward if it’s hiding in the shadows.
5 – Professional Advice
No one is the perfect entrepreneur. Even the best ones out there are usually really good at only a few things. One of these things, though, is always going to be knowing when to get help. Every successful business owner needs professional advice from time to time. A good way to fail fast is trying to take on the whole world by yourself. It is not a sign of weakness or a bad omen for your business if there are several things about it that you can’t do at a very high level. What is going to be bad for business is if you don’t reach out to consult with your mentors, discuss with fellow entrepreneurs, and make a few good hires to get everything running smoothly.
6 – Experience
A lack of experience is one of the startup mistakes that can crash a business very early on. But everyone has to start somewhere, right? So how can a new entrepreneur hope to carry a young business to maturity? Inexperience is a hard teacher, but can be one of the best ones there is. If you are prepared to fail a few times, then you are ironically on the path to success. Or, you can get help from those who have been around the block a few times.
You can greatly increase the chances that your startup will make it by learning from the experience of others. Connect with as many as you can, and learn about the others by reading voraciously. Then apply what you learn. Without both knowledge and experience, you are likely going to join the ranks of the statistics above. Having a few experienced people on your core team will also go a long way to ensuring your success. If you hire a management team or even a support team full of novices such as yourself, you are all going to end up floundering.
7 – Location
Even with a great product and a plan to build your brand around great value and great teams around you, you still need a great market. Location is everything in real estate, and this most definitely applies to where you are selling. If you do not do your due diligence to find your profitable market, you will be running blindly into business and soon hit a brick wall – or fall off a cliff. Passion is great, but wild pursuit is going to lead you to disaster. You have to ask yourself where your customers are and confirm your product to market fit before you set up shop. Move smart and move fast, but don’t move blind.
8 – Customer Research
Every entrepreneur knows that the customer has to be a top priority. Sadly, most businesses don’t really put the customer first. If you are looking at potential sales and not seeing who’s behind it, you have already missed the target. If you are collecting data on good product ideas but not spending time analyzing customer value trends, you are shooting in the dark. You have lost touch with your customers before you have even had the chance to meet them.
Use the information you have about your targets to learn how to communicate who you are to them. If you don’t, you will be unable to show them how good you are for them. They also need to feel like a real part of the relationship when you introduce yourself. If you don’t get straight to the point, you are telling them that you don’t really understand them. If you don’t speak their language, you are telling them that you are not a good fit. If you don’t communicate your value, you are telling them that you don’t know what they need and it will not be worth it to know you.
9 – Customer Dialogue
Young businesses don’t often miss this point because they are still so close to the customer after all the research and planning they’ve been doing. Some can be focused on the ideal customer, however, and still be a bit south of the mark. Thinking about and talking to customers can earn you points for sure, but this initial charm will soon wear off. Customers want you to really listen, and they know whether or not you are by what comes next. Are you now offering what they tweeted about last month? Did you make an announcement about new terms coming up that reflect feedback?
If you are that entrepreneur who is quick to spot a market opportunity but takes no steps to realize that new idea, your business is not likely to make it very far. You need to engage in real dialogue with your targets – develop a relationship, share their dreams, learn their goals, really feel their pain points and do something about it. The best business moves come from acting on a complete understanding of what your customers are saying. If you are not walking in their shoes, then you are going in a direction away from your bread and butter.
10 – Learn from Failure
We all want to succeed the first time around, and there’s no reason to think that you won’t. But when the inevitable challenges come around and something goes wrong, there’s also no reason to throw in the towel. Failure is the teacher that we call experience on his best day behind the podium. If you are not learning your most valuable lessons from your failures, then they are failures indeed. And your young business will follow close behind.
I leave you with a favorite quote, Einstein’s definition of insanity: “…doing the same thing over and over again and expecting different results.” It’s one of the most unnecessarily crushing startup mistakes to give up after you make a mistake. Learn from it, make the needed changes in your business – even when it means tweaking the plan – and just keep on swimming.