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Starting your own company requires goal setting, dedication and more persistence than you ever thought you could have. However, a vision and drive to make your business a reality will only take you so far.
Without flexibility, a mission, financial guidance and more, your dream business will be nothing more than a stressful nightmare that ends too quickly. In fact, among businesses that fail within two years, the common causes include:
- Incompetence: emotional pricing, nonpayment of taxes, lack of planning and no knowledge of financing
- Unbalanced experience: expanding too fast, poor borrowing practices
- Lack of experience with goods or services: inadequate inventory, wasted advertising budget
- Neglect, fraud and disaster
Avoid these common mistakes with the following expert advice from successful business owners in order to make your startup more successful.
Know your why
“It’s going to be our version of great, not someone else’s version. And those who agree with us, they’re going to love what we do. And those who don’t agree with us, maybe they won’t like what we do. And our loyalty and our efforts should go and be for the people who do like what we do.”
– Greg Koch, CEO and co-founder of Stone Brewing Co.
When you’re creating a new business, it’s easy to get caught up in the excitement and move operations along without establishing your why—or your purpose. This is a mistake because your purpose drives everything, from marketing and sales to hiring and company culture.
Before diving into expansion too quickly, a mistake many startups make, ask yourself why people need your business and why you’re the best person to bring this product or service to them.
Be willing to adapt
“If we see that our customers are interacting with a certain feature in a particular way, we are able to make changes to improve upon that experience with incredibly fast turnaround.”
– Lawrence Coburn, CEO of DoubleDutch
One of the most tempting things to do when starting your own business is to stay married to your original ideas without taking into account changes and fluctuations in the industry, such as target market and technology.
As a startup, you have no idea how customers will react to and interact with your product or service; leaving room for changes based on this information is critical to your success.
Be ready to adapt and integrate with sudden industry shifts, staying one step ahead of the game. When thinking from a financial standpoint, consider how your losses can be recouped if something goes amiss, allowing you to be flexible with a built-in plan B if things doesn’t go as anticipated.
Business is a numbers game
“You must know your numbers inside and out. Integrating the financial performance and metrics of your business into everything you do is a must. If you don’t know how to do that, hire someone who does and learn.”
– Ted Rollins, co-chairman and founding principal of Valeo Group
Know your finances at every step of your business plan. Make sure to overestimate costs and underestimate revenues, because that will more than likely be your business experience.
For example, as a startup, it’s important to get money flowing into your business quickly. One of the best ways to do so is to ask for deposits up front and for payment upon delivery. Once you can get your clients to stop dragging their feet when it comes to payment, you’ll have more money to work with and more profit for your startup.
If you don’t have financial experience, bring in someone who does right from the start. This person can advise you on managing taxes, investors, and financial planning, among other things.
Know when to ask for help
“This year, I’ve paid an attorney, marketing expert, information technology people, a sales consultant, an architect, an engineer, an insurance specialist, and a slew of other people for their advice and expertise. No one likes spending money—I’m one of the cheapest people I know and hate parting with the money as much as anyone. But trying to ‘save’ money by doing things on our own can end up resulting in some of the most expensive mistakes we ever make.”
– Micah Fraim, business owner, CPA
Remember that you’re learning as you go. You’re not an expert on everything, and that’s okay. Know when you’re out of your depth and ask for help. When creating your mission and goals for the business, consider where you need expert advice.
You don’t need to hire employees just yet; instead look to friends in the field, consultants and other business owners who have had similar experiences. When you ask for help, you set your business up for greater success, allowing you to avoid many of the common errors entrepreneurs make during their startup years.