As you probably already know, startup failure is extremely common. According to many business analysts, the rate of startup failure is 96% after ten years. Sometimes the market isn’t ready for what you have to offer and sometimes a competitor cuts you off with something better.
Despite these statistics, most startups can be salvaged and made into success stories. A lot of businesses, however, make mistakes that put them out of business. In this article, you will learn what to avoid in order to be successful:
1. Assume You Know Your Customers
Before you begin optimizing your marketing channels, you need to know what your customers want. A lot of startup founders are so eager to get started they automatically assume they know what the market wants. Stop right there because without in-depth research, you’re never going to succeed.
Interact directly with potential customers. Go further than that and talk to industry experts and investors. Get a full 360-degree view of your niche. Not doing so is the ultimate beginner mistake.
2. Look for Niches with No Competitors
On the off-chance you do have no competitor, there’s at least a 99.999% chance that your industry isn’t profitable. Rarely will you stumble across a new niche, but if you do, chances are you’ll be a millionaire by the end of the month. Most startup owners enter such a small niche that they fail to understand why it’s so small in the first place.
Always consider your competitors and if there aren’t many of them in your niche, ask why.
3. Try to Come Up With the Ultimate Solution
There’s nothing that hurts a brand’s reputation more than marketing the “ultimate solution” to all of the world’s problems. Startup founders are the most passionate, eager people in business. They want to change the world, but before that can happen, they must build a sustainable business.
It’s tempting to try to be everything to all people, but by stretching your resources so thinly, you will find yourself solving no problems at all.
The best places to work tend to be the ones that focus on one problem and one problem only. The whole team pulls in the same direction and everyone knows what the company stands for.
4. Overestimate Revenues
The leading reason startups never get funded is their unrealistic expectations of the revenue they’re likely to make. The majority of optimistic estimates are never met, thus disappointing anyone connected with the company.
Downsize your ambitions may seem boring and unimaginative, but it’s more realistic. By all means, attempt to push yourself, but don’t defy business principles in the process.
5. Forget About Registering Intellectual Property
They say real leaders own their mistakes, but there are some mistakes you can never come back from. Failing to register your intellectual property can bring your business to a grinding halt. There are actually people out there who find successful startups and register similar intellectual property. The successful business in question then discovers they can’t do anything because they didn’t register their intellectual property first.
Registering intellectual property is such a simple and affordable process. Don’t allow big companies to overrun your efforts because you’re missing a trademark or a patent.
6. Rely on Friends and Family to Survive
Operating your business using your friends and family resources is a good short-term solution. It should never be the only solution, however. One of the things you don’t realize are hurting your business is using friends and family because personal relationships should never mix with business.
They won’t tell you what you don’t want to hear for fear of hurting you. You’re won’t get honest opinions and even if you do, it can hurt ten times more to hear criticism from people you care about.
Use their help during the early months of your business, but never come to rely on them.
7. Not Take Cash Flow Into Account
You can have a lot of money in a startup only to have to close your doors because you didn’t take into account the flow of cash. Cash flow is the liquidity of your company and without that liquidity you will find it impossible to keep your business going.
Entrepreneurs are often guilty of underestimating their cash flow requirements. Make sure you create a solid business plan that accounts for this so you can save money in the long-term.
What do you think is the biggest startup mistake an entrepreneur can make?