The distinction between a startup and a highly prosperous enterprise is years of persistence, intuition, and timing. The startup culture is wrought with entrepreneurs incapable of converting a brilliant idea into a secure and prosperous business. In fact, a failure rate of over 90 percent is principally based on discouragement, boredom, or moving on to other ideas, not because of catastrophes. With those odds, infinite lessons are inevitable. However, learning from others’ mistakes can help startup businesses make it into the 10 percent that ultimately perseveres.
There are seemingly endless mistakes that befall startups, and it is impracticable to circumvent them all. Several common and costly mistakes can sink bootstrapped entrepreneurs. Admittedly, there are likely countless causes of startup failure, but here are five common mistakes to avoid, along with hard-earned enlightenment from entrepreneurs who appreciate the debilitating reality of those mistakes.
1. Not paying for expertise
Each area of a startup company requires expert advice, particularly for legal and tax issues. Structuring potential investments and the foundation of the business incorrectly can result in overall failure. Connect with specialists who understand your objectives and who have a keen eye for achieving your goals.
2. Scaling too quickly
Nearly three-quarters of high-growth startups fail because they scaled too fast. Businesses raise money and mistakenly believe that funding is a certainty, and draining the budget occurs when the focus is on expansion instead of determining whether the company is even viable. Before spending money, a process must be in place to generate and replace resources.
3. Failing to delegate
A classic management problem is avoiding delegation. Effective entrepreneurs are highly strategic and worry about achieving the fine details. Trusting others is essential but difficult in the beginning and the instinct to manage operations entirely alone is understandable. However, delegating functions to employees begins by drawing up processes and guidelines. That way, the workers have the direction they need to accomplish the goals.
4. Underestimating the sales cycle
Success requires time and patience. Numerous startups think achieving enterprise status occurs quickly. In reality, it can take years. Businesses must buy into multiple approval levels, from the line administrators to IT managers to the executive leadership. Over-aggressive estimation of sales timelines results in organizations exhausting their funding.
5. Confusing a product with a business
Startups may have a unique product idea but are not always aware of approaches for establishing authority. Although a product solves an individual need, a legitimate business should generate customer loyalty. The distinction involves building potential revenue streams beyond the initial product purchase. A key factor for prospective investors is envisioning longevity.
Avoiding these mistakes can keep your objectives achievable, and envisioning the ultimate end goal as presented on this infographic provides a solid foundation and a clear roadmap to the future.
Entrepreneurs should spend time simplifying their mission, breaking each part of the business down to what it does and what it represents. Creating a one-minute synopsis will produce significant dividends throughout the business lifecycle. An ideal strategy is to build a purposeful brand and take it to market quickly.