Hitting the launch button on your startup is such an exciting time, and one that you should be proud of. It’s the sum total of your efforts, your investments, and your big picture of what the future could look like.
That said, whilst it’s far bolder and more creative to start your own business than it is to work for someone else, there are a few lessons that you need to learn from the people who have been there and done it. To make sure you get the ball rolling nice and quickly, we’ve put together 5 of the common mistakes made by startups so you don’t fall into some of the common mistakes.
Trying to Do Too Much Too Soon
You’re not a FTSE company yet, and there’s nothing wrong with that. When you look at the big multinationals, they seem to be able to do anything they like, and start 20 new things all at the same time. The reason they can do is because they have resources, namely people and cash, that they can devote to their new endeavours.
What you need to do is put the brakes on from time to time, and ask yourself if you’re trying to emulate the major players. If you find that you are, then check your ego at the door, redirect your efforts to the small number of tasks that will make a difference, and continue to grow organically.
Once you learn to do that, you’ll be able to avoid mission creep and the wasted expenditure that so often comes with it.
Not Hiring an Accountant Early Enough
The numbers that accountants generate are not an afterthought that you need to have checked at some distant point in the future. They’re what actually describes how your business is performing. When you put it like that, it’s clear that you need to be on top of the numbers if you want to understand how your business is working.
If finances aren’t your thing then that’s absolutely fine, but ignoring this fact is not an option. By finding yourself an accountant at the earliest opportunity, you can ensure that you have everything set up correctly, and that you’re making the best use of your resources. You’d contact an expert if you wanted to build a website or to improve your supply chain, and your accounts are no different in this respect.
Not Setting Yourself Apart from Your Competitors
As a startup you haven’t yet built a reputation or a name that gets you business purely because people have been using you for a long period of time. What you need is to offer something that your rivals don’t, and do it in a way that makes people want to buy from you. Of course, this is easier said than done, and the specifics will depend on your niche, but the point is a powerful one.
Take protein supplements for example. There has been an explosion of them in the past 5 years, so much so that you could argue that the market is approaching saturation. If you wanted to break into that market you’d need something like an endorsement from a well-known athlete. This would be a classic example of doing something others aren’t so that you can stand out.
Setting Prices Purely to Get Orders
It’s really exciting when you start getting orders because you’ll see it as vindication of your decision to go it alone and start your own business. Whilst you should certainly take pride in what you’ve achieved, there’s an issue that comes with being your own boss—you take overall responsibility.
This means that whilst you have the authority to drop your prices to clinch a sale, you’re also the one who will make less profit if you make this a regular habit. Of course if you constantly have no choice but to lower your prices then you might be charging too much, but generally speaking this won’t be the case.
Stick to your initial decisions, test the water, and take the time to figure out whether your customer base thinks you’re offering them value for money.
Confusing Turnover and Profit
There’s an old adage that says: “Turnover is vanity. Profit is sanity.” Whilst there’s no doubting that it’s a catchy rhyme, there’s also a really important truth to it. It’s really tempting to celebrate the turnover because it can quickly build and seemingly run away with itself.
The problem with starting out is that it can be all too easy to have your mind permanently focused on it because it’s the largest number on your balance sheet.
Before you even make your first sale, you need to understand your margins so that you know how much of that turnover you actually get to keep. It’s this kind of joined-up thinking that sets the successes apart from the failures.