If you’re looking to start a new business, plan to make a few mistakes along the way. It’s all part of being an entrepreneur. In fact, making a few blunders is not always a bad thing. It can be a valuable learning experience and make you a better business owner down the track. In saying that, countless entrepreneurs have come before you and shared their experiences, so you can avoid making the same mistakes when launching a startup. Here are five of the most common.
1. Trying to do it all
While you may want to start out as a one-man (or woman) band, you’re still going to need help to get your operation off the ground. Failing to recognise that you can’t do it all is a common pitfall for many new business owners. Not only will it leave you feeling exhausted, it will likely lead to oversights or mistakes in other areas.
The most successful entrepreneurs know their strengths and their shortcomings, and delegate to fill the gaps. Whether its speaking to a friend or mentor, or outsourcing tasks that aren’t your areas of expertise, such as tax and accounting, it’s okay to ask for help.
2. Scaling too quickly
Growth is almost always on the agenda for any startup. In saying that, scaling too fast can lead to failure. This is usually what happens when business owners see how quickly they expand or grow as a measure of success. It’s in this mindset that they might start splashing out on new equipment, employing more staff, or renting a trendy new office space.
A slow and steady approach is a safer bet when you’re still in the early days. However, if you feel an expansion is warranted, or you’re growing faster than you’d originally planned, make sure you identify what and who you need to support your growth before you make any hasty moves.
3. Ignoring the facts
Don’t make the same mistake countless entrepreneurs have made before you and let the passion you have for your business idea blind you to reality. Does your product or service meet a market need? Are you listening to customer feedback and making the necessary changes?
Before you dive in, research the market and speak to prospective clients to understand what they want. Most importantly, listen. If the market for your product isn’t what you’d originally thought, or your plan to get it out there isn’t feasible, go back to the drawing board. The same goes after you launch. If the figures aren’t great or the feedback from customers isn’t positive, do something about it.
4. Sidelining cash flow
Poor cash flow management is another big reason startups fall down. While it’s easy to overlook its importance, if you don’t stay in firm control of your working capital you’ll end up struggling to cover the day-to-day operations costs. To avoid cash flow woes, set a firm budget, stick to it, and diligently record your spending.
You should also create a cash flow forecast so you can visualise the money flowing in and out of your business and work out how to encourage earlier payments, such as setting shorter payment terms or automating your invoices. Accounting software tools, like QuickBooks Self-Employed, let you create and send invoices on the go, and automate reminder notices or recurring invoices.
5. Not asking ‘what’s next?’
Often a new business begins as a single product or service. While this should be your focus in the beginning, if you don’t have a plan for how your products or business should evolve, you could be stifling future growth. Bringing in new products or services, or making your existing ones better, is what will keep customers interested and away from your competitors.
So make sure you have a long-term plan, or at least the seed of a long-term plan, right from the start. No one goes into business knowing it all, but you can go into business better prepared. By adopting the right mindset, keeping your resources tight, and not getting carried away too soon, you can make your startup a roaring success.