No matter the level of confidence, almost every entrepreneur is aware of the high failure rate of new businesses. That’s because there are horror stories everywhere. Some new startup has a great product or service and less than a year after opening they shut their doors. It’s a common tale, but one that contains learning lessons. Here are some of the more common mistakes entrepreneurs make with their startups and how anyone can avoid them.
Understand the market
An idea is a powerful thing. It’s so powerful, in fact, that single innovations frequently change and shape the world around us. Just look at the computer or the mobile phone. Where many entrepreneurs fail is in thinking that their idea will be embraced by the masses without knowing precisely what it is the masses want. While there’s no silver bullet as far as success is concerned, those with a startup idea need to buckle down and do their market research. Looking at trends in the marketplace is one of the greatest ways to hedge against failure in business.
Get it in writing
This is particularly apt for those starting a venture with a partner. Handshake deals and “contracts” scribbled on the backs of paper placemats are not ironclad. Should a business dispute arise, two parties without proper contracts can almost certainly expect a protracted – and very expensive – court battle.
Don’t go “off message”
It’s vital for the entrepreneur with his or her startup to convey their message in as concise a manner as possible. After all, businesses need capital, which comes from investors, and these folks need to be wooed. It’s difficult to do this by rambling and dealing in abstract notions. A sales pitch – any sales pitch – needs to be as short as possible and directly to the point. Experts recommend business owners take advantage of Twitter in order to fine-tune their message. This works wonders because the format is limited to 140 characters, which forces the user to trim the fat from his or her message.
Don’t overestimate/underestimate costs
In short, be realistic about how much this startup is going to cost. It may seem like an effective strategy to quote the lowest possible figures when pitching to potential investors, but if this figure isn’t enough to properly sustain the company then everything is for naught. One example involves Jet Blue. Entrepreneur.com reported that back in the ‘90s David Neeleman was looking for investors for his new airline. He was asking for 160 million, an exorbitant sum for any new business. But it wasn’t overkill; Neeleman knew exactly how much capital he needed to make Jet Blue successful, and the number 160 million. No more, no less.
This is business, not friendship
There are many family-run new businesses that wind up being great successes. However, this is the exception to the rule. When creating that new startup, it’s vital to staff it with those who know the industry inside and out. Oftentimes these people are not family and friends. Plus, when it’s time to let people go, as is necessary in the business world, the task is immensely harder when it’s a friend or relative who is getting the boot.
What no one should take away from the above list is the canard that successful businesses never make mistakes. In fact, none other than Brit billionaire Richard Branson admits that making mistakes is all just part of building a successful company. The key, according to him, is recovering from those mistakes as quickly as possible.
Peter Bowman is a professional blogger that provides tips and information on franchise opportunities you should invest in. He writes for FranchiseExpo.com, the place to find the best franchise opportunities available.
