Robert Kiyosaki, author of Rich Dad Poor Dad and Cash flow Quadrant, once said that 8 out of 10 startups collapse within their first year of operation. These unfortunate entrepreneurs fail because they repeatedly make common, but costly, novice mistakes. A wise entrepreneur learns from the mistakes made by others.
Are you an upcoming entrepreneur? Below are 12 deadly startup mistakes you ought to avoid.
1. Unwillingness to readjust your life
The businesses of eighty percent of startup entrepreneurs fail because they are overwhelmed by the rigorous demands of establishing a thriving brand. Nurturing a startup is similar to taking care of a new-born baby. It requires you to sacrifice your social life in order to dedicate more time towards marketing your products and networking with fellow entrepreneurs in your city.
In some tough situations, you’ll have to scale down your personal lifestyle in order to cover your business costs. If you’re really committed towards your brand’s long-term success, you’ll weather the storm.
2. Mistaking products for your business model
Customers purchase products because they fulfill various needs. A business is a system that ensures production, marketing, and overall growth. It’s no secret that a majority of startup business owners underestimate the importance of writing a business plan. All they do is focus on manufacturing and distribution of products, without a clear vision of where their business is heading.
Angel Investors are receptive to startup owners who have specific 5- or 10-year blueprints. In addition, you’ll have better accountability standards and reliable solutions for anticipated challenges. Having a well-written business system will enable you to generate additional revenue streams through product diversity.
3. One-man-army mentality
Successful entrepreneurs understand they cannot perfectly run every aspect of their businesses. A startup owner may be an excellent computer technician, but lack appealing interpersonal skills that are necessary to market his or her services. Startup owners who are actively involved in their enterprise’s nitty-gritty eventually get worn out. In the beginning, doing everything by yourself seems financially rational. However, as your business expands you’ll have to dedicate more hours to each department.
Hiring professionals will help you effectively cover your weaknesses. If you prefer marketing to production, consider hiring experienced technicians. A professional financial coach will help you streamline your cash flow.
4. Assuming instead of researching
Some novice entrepreneurs hastily venture into the business out of the excitement generated by their initial products. It leads to them wrongly assume their product or service will shake up their target markets, and become a household name really fast. This euphoria pushes them to raise loans and channel their savings into funding their startups. Then reality sets in, and the owner realizes they should have researched the market before launching the business.
A wise startup owner befriends successful entrepreneurs who are already established in the targeted industry because these friendships provide credible information based on the first-hand experience. A seasoned entrepreneur in your target market will link you to a variety of high-quality suppliers, and enlighten you on cost-cutting methods.
5. Rapid expansion
All entrepreneurs possess a burning desire to take their business to the next level. The possibility of establishing branches all over your city, and increasing your staff exponentially within the shortest time possible, might seem the best approach towards attaining the lion’s share of the market. However, business growth requires in-depth research and strategic timing.
Startups that expand rapidly usually experience acute cash flow problems. As a startup owner, you should have concrete information about your sales revenue growth, and then use it to plan a feasible expansion strategy.
6. Stubbornly clinging to wrong ideas
Entrepreneurs who refuse to test their ideas in realistic market situations end up making costly mistakes. Large companies are also not exempt from making this mistake. Amazon launched Fire Phone in 2014 but threw in the towel in 2015 due to poor market penetration. Another example is the executive management of Samsung, underestimating its global dominance in the Android smartphone market.
In other situations, entrepreneurs wrongly cling to obsolete production or marketing ideas, instead of embracing modern approaches that are highly effective.
7. Refusing to delegate authority
If you think that a startup owner should be the only authority running a business, you’re wrong. As your business grows, you’ll be required to focus more on larger roles. You’re bound to suffer from mental stress if you’re planning a meeting with strategic investors while conducting job interviews on the same day. When you have no one to consult with, you’ll repeat the same mistakes, to the disadvantage of your startup.
Delegating authority eases your daily burden, and empowers your employees to tackle challenges that would have consumed your time. You’ll also gain new insights through interacting with the employees in charge of various departments since each leader brings in unique perspectives.
8. Throwing money at every problem
It’s obvious most startup owners believe that 90 percent of the problems plaguing their businesses can be eliminated through injecting more capital. This mentality motivates startup owners to constantly raise loans whenever problems arise. The truth is, some of the problems you might be experiencing could be as a result of your negative habits.
Startup owners who depend on money for their happiness and internal security are prone to wasting capital on the wrong problems. Analyze your business model for any flaws that could be the real source of your current challenges. If financial models aren’t your cup of tea, you can always hire a certified business coach.
9. Expecting quick sales
You may run a fantastic marketing campaign that elicits numerous positive comments on social media, but you shouldn’t assume that your products are flying off the shelves. Some customers require time to really decide whether or not to purchase your new product. A different set may be really interested, but can only afford your product or service when they receive their monthly salaries. In addition, you’ll have to make follow-up calls to potential clients.
Your business requires sustainable cash flow and adequate reserve capital to sustain daily operations. It might take months before you get to enjoy the fruits of your marketing campaign.
10. Dreading failure
The life of an entrepreneur is filled with victories and losses. If you believe losing makes one a failure, then you need to drop that faulty mindset. Winners view losses as temporary defeats that carry wisdom which can be used to attain success on the next attempt. Startup owners who grab challenges by the horns are bound to make several mistakes. However, these encounters expose daring entrepreneurs to new situations that enable them to gain new knowledge and get rid of faulty paradigms.
In most cases, fears are exaggerations of situations that will most likely never occur.
11. Refusing to learn something new
When the business is doing well, some startup owners become content way too soon. Contentment can bring about an ignorance of important intelligence. This happens when entrepreneurs look down on newly published informative material because they falsely believe they already know everything there is to know about their business. In today’s market, business owners who are reluctant to learn emerging social media marketing techniques fail to effectively engage their target audience.
12. Ignoring local business networks
Interacting with startup owners who belong in the same industry provides important short- and long-term benefits. You’ll get informed about the best and worst product suppliers in the market, and effective yet low-cost marketing methods which fellow entrepreneurs use to boost their sales. Whenever challenges drain your morale, members in your network will be there to provide moral or financial support.
Business networks have plenty to offer, but ignorant startup owners avoid joining them because they fear exposing themselves to fellow businessmen will lead to loss of trade secrets.
Have you made any of the mistakes listed above? By following the recommended solutions, you’ll soon pave your way towards becoming a successful startup owner. Don’t leave without posting a comment or question in the comments section below. We would be glad to clear your doubts or know your story.