Startup entrepreneurs face a lot of challenges from the day of establishing the company. These problems range from lack of capital funding, the need to find more clients/customers, selecting and hiring the right people, leasing the right office space, and even business registration and taxing issues.
All these challenges could be overwhelming to a newbie entrepreneur. In fact, the success rate among startup entrepreneurs in America is only 10%. The average lifespan of the unfortunate 90% is only 3 to 5 years.
There are many reasons why startups fail – most of the time, it is caused by bad business decisions and mistakes by the founder (or co-founders).
Disagreements are also inevitable between co-founders and top managers, especially when it comes to the direction of the company and management of employees. Such disagreements only add up to the problems and hardships of being a startup entrepreneur.
To minimize the chances of failing, you should at least know how to avoid the common pitfalls of failed startup entrepreneurs. Below are their 3 most common mistakes, and how to possibly avoid or correct them.
1. Expanding too fast (or too slow).
An expansion is probably on every startup entrepreneur’s mind, but there is no need to rush into it if the company is not yet ready. There’s no need to spend for expansion if the company is still struggling to come up with a steady stream of income.
Sure, you may have gathered enough funds from loans and investors, but this is a big responsibility to bear – and if the company is not yet ready, you’ll end up struggling day to day just to keep it afloat. That’s why you should think twice before getting a new office to open a new branch.
Expanding too slow also has consequences. If the company is actually ready, refusing to expand could also mean that it might be outgrown by competitors. As much as you can, take more risks for the company by investing more in talent, infrastructure, product/service improvements and more.
Knowing when to expand or not takes some skill and foresight. Each company has its own pace for growth, and there are several external factors (such as the local economy) that can affect this.
The only way to avoid this mistake is to set goals for the company each year (or every other year). You have to personally track and set expansion goals by the 3rd and 5th year. Then each year, you have to check if you are actually closer to such goals and adjust your pace accordingly.
2. Failure to properly delegate tasks.
Most startup entrepreneurs, especially for those who are experts in their chosen niche, have trouble trusting other people to do certain tasks for them. This happens frequently because as a business owner, you will naturally feel that no one else knows the business and products better than you do.
However, you should eventually let go of this thinking if you really want to build a successful startup. You have to face the truth that you cannot do everything by yourself. There are many talented people out there, and all you need to do is to hire and train them to perform tasks well.
You need to learn how to delegate simple and complicated tasks to your team. Proper delegation can avoid you from getting burnt out, and it allows you to focus on bigger things for the company – such as expansion, marketing and growth planning.
You can start by making a list of tasks that you think can be delegated easily. You can also add complicated tasks later once you found the right employees that can perform them as good as you can.
3. Lack of marketing and product improvement.
Behind every company is a quality product or service. Your products and services are the bread and butter of the company, and if this fails – then don’t expect for your company to be in the business for long.
You have to remember that there are plenty of companies out there who are probably doing the exact same thing you do, and if so, how can you convince customers to choose you? This is where your marketing skills should come in.
You have to know where to find your target market and communicate with them effectively. Best of all, you have to deliver – deliver the promise of your brand, and deliver top-notch products and services that will eventually sell themselves through word of mouth.
When it comes to product improvement, however, don’t focus too much on the product itself. You also have to take customer experience and feedback into account.
Yes, you may know everything about your product and service, but you can still miss some design details and functions that are actually more convenient and useful for the average customer. To perfect your product, you must merge your expertise with feedback from the majority of your customers.
Again, being a startup entrepreneur is not a walk in the park. Sure, it may sound cool that you are running your own small company already – but this is definitely not just about fun and games. Running a company requires talent, skill, and foresight to ensure success.
Related Read: 5 Skills & Qualities every Entrepreneur should have
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