Starting your own venture is a tempting thought. Yet, for every enterprise that is successful , there are two that bite the dust. One of the biggest challenge is to convert the idea into a profitable business model.
Since the first year can make or break the business, here are the most common 10 deadly mistakes to avoid as you start your business.
1. Inadequate research
There is no shortage of ideas but the tough part is testing the hypothesis – converting your ideas into a viable business model. This is not possible without market research.
You will need data on the size of the potential customer base, competition and external business environment, to be able to clearly define your revenue channels.
A thorough research will not only reveal the potential, but also point out the limitations of the idea.
2. Scaling up too early
Even if you generate consumer interest, you ultimately have to scale up the business to make it grow. This is possible only if you have got it right in the first place.
So fix all the possible glitches and teething problems before you think of expanding. Moreover scaling up requires deep pockets. So nail it first – start small, have short-term goals and perfect the product and revenue model.
3. Avoiding New Technology
As small business owners, technology can provide new opportunities, help us do our work more efficiently and even help us save money.
New technology may be intimidating, and require time to learn and understand, but an unwillingness to adapt to technological advances can hurt your business in the short and long-term.
4. Going by flawed assumptions
Even thorough research can’t guarantee success . There could be bugs in your business model, often in the initial financial projections and the business math around it.
A simple solution is to beta test your prototype to find and fix the faults before the product is launched.
This is also a great way to get feedback from users. It pays to go back to the drawing board if the feedback is negative.
5. Not keeping tabs on costs
Keeping the overhead costs low is essential for a start-up. A small venture is starved of money and if expenses are not controlled, it will soon run out of working capital.
You can cut costs while building your website by using online platforms like fiverr.
Also, while there is the constant need to meet clients, do not spend heavily. Talk to them through video conferencing or meet them in their office.
6. Doing it all alone
Don’t waste time on something that can be done by someone in a faster, better and cheaper manner.
To run the business, you need a team that can take care of various peripheral aspects and leave you with the core functions.
Whether you hire full time employees or work with consultants depends on the kind of industry you operate in. If you are short on cash, start with consultants.
7. Not maintaining a financial buffer
Many people hesitate to start a venture because they are the sole breadwinners and loss of a regular monthly income can pose problems but a working spouse can ease the pressure.
The gestation period of a business venture can be long and painful. So, make sure you have finances in place before taking the plunge.
If possible, prepay outstanding loans, banks and lenders may be more willing to give funds to a debt-free person.
8. Fearing failure
No matter how much entrepreneurs may glorify failure, there’s still that scary word: fail. And nobody wants to be the opposite of success. It’s really the wrong term, because ‘failing’ means there’s no benefit, and most times that’s just not true.
Change the mindset. You didn’t fail — you ran an experiment that will improve your next business. Although it hurts a little bit each time, now you’ve learned something, and you can apply that lesson to move forward and make your business better.