Aside from facing the challenge of attempting to build a company from the ground up, many entrepreneurs have little prior experience in the business world. Even when they have an incredibly awesome idea, complex problems arise, such as managing the young enterprise, handling finances and hiring employees on a budget. Mistakes and entrepreneurship go hand-in-hand. Therefore, even with meticulous planning, you are bound to go wrong. Some will make you a better entrepreneur while others will flat out ruin your business. Knowing which ones to avoid beforehand can save you a lot of time, money, and heartache. Be sure to not add your start-up to tales of disaster. Here are some start-up mistakes to avoid at all cost:
The business entity concept: The very first thing to keep in mind while working on your start-up is to keep your personal and professional life separate. A successful entrepreneur knows how to keep it balance.
Thinking money solves everything: Struggling entrepreneurs often think that if they can just raise another round of financing, their problems will be solved. But it doesn’t work like that. If your business model isn't sound, throwing money at it is not going to work. You have to fix the problem first, and then raise the money. Doing it the other way will only get you in more trouble.
Don’t be afraid to fail: The biggest mistake you can make is to be afraid of failure. How you pick up after failure and learn from your mistakes is the key to great success. 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.
Ignoring your customers: When you have a solid business plan that looks good on paper, it's easy to get carried away with implementing your idea that you forget the most crucial part of your business — your customers. Start-ups that make this mistake usually end up with unfavourable results since customers are the backbone of every company. So, if you want to stay out of the list of start-ups that fail, you need to put as much focus on meeting the needs of your target as you do with implementing your ideas.
Framing a sound business plan: Having a solid business plan plays a vital role in determining future success. A business plan, after all, serves to guide the start-up in the right direction by answering the following questions like — What is the purpose of the company? Who are the potential customers? What are the mission and values? What's the direction desired for the company? Who are the company's competitors and what are they doing? How can the company measure success? In other words, a sound business plan determines every aspect of the start-up. And whenever the company is stuck or a new venture is to be launched, refer to the business plan. There's no need to go creating a business plan in as formal a manner as someone would in business school. But having a business plan is recommended since it will help determine the company's direction over the long term.
Not paying for expertise: The biggest mistake an entrepreneur can make (and most do) is to believe that, just because they are an expert at what they do, they have what it takes to run their own business. Find an expert whose job is to know exactly what you need to do.
Handling money incorrectly: When it comes to start-ups, having money is much a big deal and it needs proper handling. One of the biggest mistakes is spending too much, which may occur when a business owner or founder becomes overly eager and hires a ton of people. At first, the entrepreneur may believe all the new employees are needed.
But this will just mean burning through the start-up's finances faster. To avoid this, hire only those truly needed and take staffing up step by step.
A founder may be tempted to blow through a lot of cash pretty quickly, spending on unnecessary expenses. Instead of these funds going to good use, they're just wasted. As an entrepreneur, it’s easy to fall in love with your business idea and fail to fully understand or appreciate the economics. To avoid mistakes in your planning and launch, entrepreneurs must start off with a clear profit and loss, and cash flow plan that details what your business metrics need to be in order to survive in the short term and succeed in the long term.
Without proper management and use of its finances, a new business may never set sail. Be sure that someone good with numbers can help out with this.
The writer is Chief Executive Officer and Director, Wishbells, New Delhi