If you’re getting ready to open the company doors and begin operations, it makes sense to run through a checklist of items just to be certain that you haven’t forgotten anything.
10 Startup Pitfalls to Avoid
And when it comes to starting your own business, it often pays to take a hard look at the “what not to do” list as well as the “to-do” roster. Here’s a relatively universal collection of common startup pitfalls.
So, if this is your first go-around as an entrepreneur, spend time making sure you aren’t guilty of committing any of the following transgressions.
Not Having a 30-Second Pitch
Okay, perhaps you’re not as much of a people person. You don’t need to be in order to be a success. But you absolutely must create and memorize a 30-second blurb about what your company does and why people should use your services or purchase your products.
This mini-speech is what some people call an elevator pitch because you should be able to recite it, convincingly, between floors to the assembled riders.
Lack of Enthusiasm
The overused saying about doing what you love has a grain of truth in it, particularly for entrepreneurs. Unlike a 9-to-5 job where you’re beholden to a company you did not create, your startup is about you, about what you’re good at, and what you enjoy doing.
From opening day onward, this will be your profession, so it’s best to select something you have a lot of enthusiasm about. The big mistake some make is getting into a field solely for the potential monetary reward.
In the beginning, follow your interests. After you begin operations, there will be plenty of time to follow the money.
Ignoring Your Monthly Expenses
Money has a way of calling attention to itself, especially when there’s not enough of it to go around. The first step to building a successful organization is getting a handle on your personal monthly expenses before you can get your business finances in order.
Search for ways to reduce cyclical cash outflow in order to free up additional funds for the business. If you currently have education loans, an excellent way to reduce expenses is to refinance the debt through a private lender.
When you take the time to look at your student loan refinance options, it’s possible to find more favorable interest rates, better repayment terms, and significantly reducing monthly payments.
Choosing the Wrong Market
Even if you find a niche you love and one in which you have lots of experience, be careful not to get involved in something where the competition is too stiff.
For example, if you hold a commercial real estate license and have a few years of selling under your belt, check the local market to see how many mega-firms exist, what kind of share they have, and how aggressively they operate.
Unfortunately, just because you have skills and enthusiasm in a particular field does not mean that niche is a wise one for startup entrepreneurs. Common examples of this principle, at least in larger cities, include commercial real estate, car sales, food vending, and liquor sales.
Not Being Careful About the People You Hire
With success comes customers, and with a larger customer base comes increased sales. At some point, if you do well, chances are that you will need to hire people to help you deal with the higher level of activity, income, sales, and service.
This is a good thing because it’s a sign of healthy growth. Be careful not to rust the hiring process. Unless you have decent HR skills, consider outsourcing the hiring task. Be specific about the skills you’re looking for, educational background, attitudes, and more.
Taking enough time to identify well-suited workers pays huge dividends.
Not Tracking Financial Progress
It’s easy to get excited about those first few clients and the initial inflow of revenue. Unfortunately, far too many newcomers to the world of entrepreneurship fail to adequately track all their income, expenses, asset acquisitions, and other money-related events.
Having a decent accounting software product is not enough. Unless you’re a trained accountant, it’s best to consult with a CPA who specializes in startups. There’s no need to spend a fortune on these services because most for-hire accountants will sell you small increments of their time based on your needs.
During the first six months of operations, consider having a CPA sit down with you and go through the books. For the money you spend on the consultation, you’ll get an informed opinion about how you can improve income and expense tracking.
Not Devoting Enough Time to Networking
Some new owners network like crazy for the year before they open their doors. The goal of all the activities is to find financial backers, get advice from experienced professionals, make contacts with potential clients, and scope out the office space situation.
However, once you get underway with the new company, it’s too easy to neglect the networking effort. Actually, it’s during that crucial first 12 months of operations that you should be giving more time to building your network than ever before.
Set aside a few hours each week to do nothing but make connections with local organizations, other owners, potential clients, social groups, churches, civic volunteer organizations, and more.
Ignoring the Competition
If you get underway before researching the competition, you’re at an automatic disadvantage.
Spend hours digging deep to learn what your market niche is like. That means knowing who the players are, who the other newcomers are, and what the lay of the land is.
Many large, highly profitable corporations have entire departments devoted to analyzing what competitors are doing.
Being Apathetic About Customer Service
You constantly hear about the importance of customer service, but there’s a reason for that. It’s probably the number one area in which new business ventures fail. Amid profits and initial waves of success, follow-up and traditional customer service chores can seem like a nuisance.
In fact, your entire future depends on making people happy with what you do or sell, so take time to build a comprehensive customer satisfaction strategy.
Not Getting Legal Advice
For some reason, many people only consider getting legal advice when they’re in trouble. But, in the business world, consulting an attorney before opening a new company is a very smart move.
Plus, you won’t have to break the bank to pay a reasonable consult fee for a few hours of the attorney’s time. Check local listings and find a lawyer who specializes in startups.
This small chore takes just a few hours, costs a couple of hundred dollars, and will help you spot key oversights like certifications, licenses, and operating certificates.