The last decade has been described by many, as the ‘era of entrepreneurs’. And the emergence of so many start-ups all around us is a testament to that claim. However, a study suggests that more than half of such start-ups are shut down within a year of their launch and more than 2/3rd of them close operations within a couple of years. And in most cases, it happens because of few mistakes that is seen across many of such start-ups.
Mistakes Every Startup Should Watch Out
If you are a budding entrepreneur and planning to launch a start-up then we present you these top five biggest mistakes every startup should watch out for (and you should try to avoid).
1. Lack of Understanding of Their Market
As obvious as it might sound, this is one of the biggest reasons why most new start-ups fail to succeed. In their enthusiasm to get the company started and running, most new business owners fail to understand the market and their prospect customers and clients. You simply can’t afford to build a business model without understanding your target users first. It doesn’t matter if you plan to build a product aimed at a specific group of users or your start-up is going to offer a range of services to a group of clients and customers, unless you spend time understanding what your users and customers are going to expect from your product or services you can’t succeed.
Imagine a start-up that plans to build a software on SaaS model, offering Casting Crews and Production Houses an app to automate their casting process and imagine if the creators of this app never dealt with the Casting industry and hence didn’t understand how it works. Similarly let’s suppose a start-up is launched offering various Software Outsourcing and IT Services to corporate customers. For such a start-up to succeed the founders should first have the understanding of how software and business process outsourcing works and more importantly, why clients decide to outsource IT work.
2. Lack of Proper Planning
Conducting in-depth planning is a critical first step for every entrepreneur. And yet, this is another most common reasons why most new start-ups fail. Most of these entrepreneurs fail because their original business model was not viable, in the first place. You may be very brilliant at what you do, may have a great team with you and good investors but if your business model is faulty then you should fix that first before launching the company. Most young entrepreneurs are prone to get overexcited over an interesting business idea and forget to look for the facts about how many customers and clients will actually want to use their service or product and this often leads to their downfall. If you want to kickstart an eCommerce website, then check out these places for online business ideas.
3. Inability to Put Together a Great Team
This might sound like a non-issue at first. Especially for the enthusiastic and confident entrepreneur inside you who thinks it is easy to gather a team quickly and hire loads of interesting people on board. However, truth to be told, building a great team is an art in itself and requires lot of patience, hard work, networking and… sometimes, money. You might be one of the brilliant minds in your field at the moment but running a company is a tedious job and requires contribution from other team members. At first you may get away with doing everything yourself but there will be soon a time when you’ll need a team to get things done. And most new start-ups who fail to realize this often fail during their first year.
4. Lack of Marketing Efforts
It is easy to fall into the trap of believing that, ‘you build a great product and they will come automatically’. And this trap often leads start-ups not to plan or keep a separate budget for marketing. Such entrepreneurs owners believe marketing is an unnecessary expense, while, on the contrary it is even more important than sales. But many new business owners confuse marketing with sales and it leads to their downfall. Letting the word out (marketing) should be planned even before you hire a sales team to start looking for prospects and clients.
5. Ignoring Criticism
If you are the founder of a start-up then more often than not you will be willing to turn a blind eye towards all the criticism that you receive. The passion and enthusiasm of their idea leads to certain amount of bias and as a result many new entrepreneurs often disregard their critics even though they are valid. In long run, this can lead to accumulation of problem areas in your business and in cases they can grow enough to cause your company’s downfall. The ability to listen strong criticism and take necessary actions can go a long way towards helping you learn from your mistakes and grow as an entrepreneur.
