Almost 90% of startups fail, and every year that a startup makes it through, proves to overcome the worst odds. Beginning your startup journey is an arduous process. With scarcely any money to come across and connections becoming harder to establish, the entrepreneurial journey can be isolating.
In truth, most of the reasons businesses fail are avoidable if you know what previous mistakes business owners have made in the past. Studying businesses within your niche can help identify the best practice and biggest mistakes for your niche and the startup process in general.
Here are 7 common mistakes that entrepreneurs make when it comes to their startups:
1. Securing Adequate Funding
All entrepreneurs know of the value funding plays when starting a business, but not many know how to assure financial security. The lack of funding is one of the top reasons why startups fail.
It is important to consider all your options when raising money for your startup. Several companies assist startups in their growth, and each one comes with its own benefits or shortcomings.
There are many ways to procure funding, including loans from banks, angel investors, and even advance contracts. Do extensive research to determine which method works best for your startup.
“When you decide which method to pursue, you need to pitch your story to investors,” says a representative of Newchip Accelerator Reviews. “Ensuring that your story is concise and interesting is key to winning sponsors for your startup.”
2. Identifying the Competition
When entering the market as a brand-new business, you must already be aware of who your competitors are, what services they offer, and what sets you apart from the rest.
Too often, entrepreneurs get caught up in their amazing brand idea or invention and forget to do the research to determine whether their product is unique. Understanding what differentiates them instead of duplicating the products of others is key in a new startup endeavor.
Assessing the playing field when it comes to competition helps you choose a specific niche and market your products or services to your clients by providing better quality. Start by running a S.W.O.T. analysis to visually see where you stand compared to the existing players in the market that you are trying to enter.
3. Rushing Expansion
Too many entrepreneurs try to expand their business as quickly as possible, and they often end up losing profit, having unhappy customers, or failing altogether.
A business needs to establish standard operating procedures (or SOPs for short) in order to cope with rapid growth. Without SOPs, the quality of your product drops, and naturally your customers will be dissatisfied due to the lack of consistency and customer support.
But there is a time and place for everything. Wait until you’ve established a loyal customer base and products before seeking to expand into other areas. Cash flow pays in dividends.
Avoid getting caught up in the hype of your success and ensure that thorough market research has been done before anything else. As your business grows, you will find additional support along the way, which you’ve never considered. For example, it’s easy to keep track of 10 customers or clients on a spreadsheet, but once you scale to 1000, then you’ll require a very structured customer-relationship management (CRM) system to keep track of everyone thoroughly.
4. Not Enough Research
Ever get excited about an idea and think that would be a great product I could sell? Sometimes, business owners run with the concept without fully doing the research to verify whether customers would want it.
Reassess your business plan based on extensive research for the consumer demand for your product.
5. Failure to Adapt to Technological Advances
In an ever-developing society, most businesses in the 21st century, especially corporate giants in the industry, rely on technology to expand their customer reach and improve labor efficiency. Solely depending on the limits of your skills and paying for cheap solutions to your business’ problems is a sure recipe for disaster.
One way to get a head start in the game is incorporating modern technology into your startup and leveling the playing field with your competitors through new and innovative modes of using tech.
6. Lack of Advertising
Having a great product isn’t enough for your business to succeed. You need to get the word out there about your innovative startup and the solutions it provides. You might not generate enough income for your startup just relying on word of mouth. While it is a highly effective method, building an initial audience is vital.
Advertising is crucial for your business. You must boost excitement for your product to potential customers. Marketing your product before it’s even released is an important strategy to build customer buy-in before your business launch. Use such strategies to set your business apart from your competitors and create brand recognition.
7. Failing to Meet Promises
One of the perils of advertising before your product is released is neglecting to fulfill the promise you made upon your product launch. It’s tempting to oversell to customers but creating unreasonable expectations can mean the immediate downfall of your new startup. Your customers may feel deceived, and as an entrepreneur, you’re starting on the wrong foot.
This is especially important if your startup relies on crowdfunding for resources, as your supporters are entitled to the product version you originally advertised.
Learning from Failure
Understanding how the market operates is foundational in your success as an entrepreneur. Your startup’s success depends on business savvy and a reasonable grasp of launching a new business. Uncertainty is common, but learning from the past is a key indicator of potential success. Establish a plan and work it diligently to give your startup the best possible chance at success.