7 Common Startup Mistakes That Entrepreneurs Make
Launching a new business is risky and everyone should remember that.
But when fortune smiles on a new startup (let’s call it Mr. x global company) following a series of mistakes, war with bankruptcy, no visible bump in customer turnout, and low product sales; everyone suddenly joins the bandwagon of entrepreneurship and wants to be like Mr. x global company- forgetting about the risk and the lessons and hoping for an even better success story.
Who knows, however, if the story had been told differently and potential business owners were well informed about the common mistakes of startups: maybe someone will not have started the wrong business in the wrong place at the wrong time.
Maybe startup founders would have learned how to navigate the stormy waters of entrepreneurship with more reliable information and preparedness.
A lot of startups have failed due to little or no experience while many others have also succeeded.
The successful startups know that you need more than optimism and passion for making your business work: You need a road map that not only helps you identify the metrics for success but also warns you about the dangers that can surely derail you.
Here are 7 common startup mistakes that can destroy your business
1) Trying to do everything yourself
Do yourself a favor by getting all the help you need from the start.
While it’s tempting to design your own logo, do your own bookkeeping, run your own payroll, serve as the marketer, the driver, the cleaner and even the gatekeeper, it’s usually a bad idea.
Many a business has crumbled because the founder got worn out from trying to do everything.
Running a small business, even if it’s a one-person business, involves too many different tasks that no one people should plan to take on all by themselves.
So, just because you can do it, doesn’t mean it’s the best use of your time.
The sooner you begin to delegate, the better it will be for your business and health.
2) Bad Book Keeping:
Bookkeeping or accounting is an aspect of your business that must be taken seriously. So what happens when you have bad bookkeeping practices in place? Well, to be frank, your business suffers.
Running a single bank account for your business and personal spending is a typical example. Consequently, separating your business expenses and income from personal spending becomes increasingly difficult and stressful.
For many small business owners in Nigeria, bookkeeping is seen as additional expense for the business.
Without a full understanding of your finances, you may quickly find yourself adding to the number of failed businesses within a few years of your startup.
The benefits of establishing simple procedures and good bookkeeping practices will more than compensate for the investment of spending a few extra Dollars each week or month on bookkeeping.
Why not hire a professional bookkeeper or accountant.
They see patterns, notice developing trends, and they have the benefit of experience that you can take advantage of in your business.
3) Entering a crowded market without a distinct competitive advantage
Think about how you are going to distinguish your business from every other business in your niche.
A competitive advantage is a way in which you can create value for your customers that your competitors cannot. This may be low cost, fast service, better customer service, location, quality, or many other factors.
For this to happen, you have to analyze your business’s strengths and those of your competitors, and then learning how to take advantage of these factors.
Underestimating or ignoring the competition is one quick way to destroy your business. You have to constantly learn and evolve. Therefore, you need to know what it is your competitors do
Therefore, you need to know what it is your competitors do well and do not do well. Think about your competitors’ products, services, prices, location, and marketing. Then, compile a list of all the reasons you feel a customer would choose your competitors’ business over yours. From here, make changes to your existing strategies or decide on a unique offering your customers
From here, make changes to your existing strategies or decide on a unique offering your customers can’t find anywhere else. Now, that’s competitive advantage.
4) Hiring Poorly/Cheaply
All businesses, large or small, want to save money wherever they can. That is understandable. What is unforgivable, however, is why so many small business owners try to take the cheap route by hiring the under qualified employee.
Hiring the wrong person for a position is an expensive mistake for a company to make.
A bad employee will cost you time and money in terms of productivity and the eventual need to recruit and hire a replacement employee.
There are also hard-to-quantify costs that could be lethal to your business such as customer dissatisfaction, lost customers, lost sales, reduced quality of products and low production.
A bad hire isn’t necessarily in terms of university qualifications but skill sets and solutions that the employee brings to the table. Have a standard recruitment exercise and don’t hire based on sentiment and or desperation.
5) Ignoring Customer feedbacks
Be open to criticism and complaints from customers. The way companies handle complaints can mean the difference between success and failure in an increasingly competitive marketplace.
Businesses that turn complaints into opportunities for building closer relationships with customers are the ones that are most likely to survive and prosper.
The way companies handle complaints can mean the difference between success and failure in an increasingly competitive marketplace. Businesses that turn complaints into opportunities for building closer relationships with customers are the ones that are most likely to survive and prosper.
It’s often difficult when the topmost complaint from your customers is that your products are too expensive but it’s often wise to listen except you are sure that there are no competitors.
When you fail to create happy customers, they return the favor ten folds.
Criticisms can also be centered around poor product quality or failure to deliver on promises. When such situations arise it is always better to make amends instead of entering a war of words with customers.
Customer feedback is critical to developing your product and business. When you give your customers meaningful opportunities to provide feedback, you gain insight into their needs and perceptions, develop better solutions to their problems, and create a give-and-take relationship that can help build trust and loyalty.
6) Poor marketing
Far too many small businesses in Nigeria are reluctant to spend any money on marketing, let alone a significant amount.
My advice: Create a marketing plan, set up some marketing campaigns and keep doing it if you want your business to be successful.
You can even market your business before you open it. There’s no rule that says you have to wait until your physical or virtual doors are actually open.
New businesses should also take advantage of the Internet to drive home sales.
List your business on business directories in Nigeria such as TrustOrRun, Vconnect, etc. build a website for your business; open an online shop on Konga, submit original articles that can answer your customers frequently asked questions (and ultimately position you as an expert) to TrustOrRun.
Marketing is pivotal to business growth and startups that failed to recognize this have long been forgotten.
7) Not investing in research:
I love that beautiful classic by Bob Dylan: the times are a changing.
The same rule is constant in business. What was acceptable or welcome yesterday may be outdated today. Your customer needs are constantly changing.
Technology is improving by the hour. The world is jumping from one marketing and social media platform to another. And it seems the world is moving faster than it can contain.
Sadly, small businesses must also flow with these trend.
That’s where research comes in.
Research helps startups stay ahead of the times and needs of this ever-changing world. It helps to keep up with the latest advances in business marketing and even enables you to predict the future.
Research also involves testing your products and services before releasing to the wider audience or marketplace. This way, you can be sure to make amends to initially undetected flaws and fine-tune your products to suit your target audience.
It’s unimaginably sad to see or hear of small businesses folding, and it’s even worse when they have to fold up after two years or more.
Any one of the above-listed causes could be the reason why this happens. And as much as possible, new small businesses should try to avoid the same mistakes.