Many start-up businesses crash and burn before they can even get off the ground. At times, entrepreneurs do not have a fool proof plan or they plan too much and forget what their original business is about. Sometimes their egos hinder them from making good decisions or the interest they originally had dries up.
Whatever the reasons, start-up failure is so high that some entrepreneurs upon hitting a road block bury their head in the sand and give up.
This is bad because new businesses are important; they provide the balance required in the corporate world. It is not good for a few select big companies to have a monopoly in the market. This result in price wars between titans with the consumers lost in the struggle. New businesses provide consumers better options and cheaper alternatives for daily necessities.
And because they are important, here are some common but dire mistakes that occur at any point in the start-up which contributes to its downfall. Try to avoid them.
1. No ‘I' in team? There's no ‘U' either: When you start a business, without a doubt you will have friends and family asking you for a job, hoping to fill key positions so that they can get a leg up in the world. The problem with this is that people close to you tend to think they should be treated differently from the other employees. At the workplace, this is a recipe for disaster. Also, if you hire someone out of compassion instead of what they can do for your company, you're setting yourself up to regret this decision. Granted there are some talented people who are passed over due to a lack of qualifications but you need to make sure that your interview process is as thorough and objective as possible. Hire the best one for the job regardless of qualifications and personal ties.
2. Delusions of grandeur: Sometimes, entrepreneurs are so overly enthusiastic about their products or services that they think it is far more special than what their customers think. It is important to understand what your customers think and is saying about your company. You may have a great product but you could be marketing it wrong or to the wrong crowd. It is important to always touch base with your clients to stay firmly on track. Losing sight of this will cause so much damage that will cost you more money and time to repair.
3. Not special enough: If you think your product or service is special, it is imperative that you have a unique selling point (USP) to market to your crowd. Without one, you are no different than the other more established brands in the industry. Without one, customers have no reason to stop buying from the other established brands and turn to you instead. If you market being a cheaper alternative it would only make you look desperate. This is the quickest route to failure.
4. Jack of all trades: Master of none. Having a product that tries to do everything implies you specialize in nothing. This also confuses customers and makes them wonder why they should buy from you when your business model is scattered. Customers want to feel like they are taken care of and that their money will be well spent. This is done by making them confident that the product you create is for their benefit. Being focused is a good sign of dedication. Trying to cater to everyone is not. It not only reeks of desperation but also lack of purpose.
5. Customers are always right: Well, not really but it is a grave offence to tell them this. They may be wrong but you are in the business of making them happy so your customer service must be impeccable. This is crucial at every stage of your business, whether you are at the bottom and just starting up or are at the top, with a monopoly on your industry. Customers can make or break you no matter where your business is so it is important that you always practice good customer service. This does not only mean the customer service team but everybody. Learning how to present yourself to a stranger on the road who is revealed to be a customer is as important as speaking to someone who calls you on the phone at work asking for help.
6. Eggs in one basket: It is very tempting when a large majority of your business comes from a small pool of clients that you drop everything to cater to their every whim. After all, they are the ones that are keeping you afloat, so who cares if you, the CEO of XYZ Corp become the butler of this exclusive group? Now what would happen when this group decides to move on to a different company and take their business with them? You are back to ground zero. In any business, it is a time bomb to put all your hopes in your most profitable clients. You need to diversify and create new relationships to keep your ship afloat. Do not allow complacency to rob you of your business senses.
7. You are your worst enemy: As the entrepreneur, you have a reason to be passionate about your business. It is your baby and you should do everything you can to see that all your blood sweat and tears pay off. However, there comes a time after it has paid off when you need to step back and let your company evolve. Too much hands-on at this point will only make your employees frustrated and dependent on you. It makes adapting hard if you are unwilling to let go or adapt to a better vision, one that may be radically different from what you intended. When it is time to let go, let go. Your role in the business will have changed and it is important for you to move to that new role.
There are certainly far more mistakes one can make during the start-up process but compiled here are faults which are common and serious. Before you even embark on a start-up, speak to other entrepreneurs who are successful and learn from investors.
Get someone who is well versed in business plans to go through it with you and point out any nagging errors. Make it your mission to iron out the details and nail down the specifics to your business before you start (but don't forget to leave room for strategic changes) and you should see a higher success rate than most of your predecessors.