Within the past couple of years, start-ups have seen a high spike in popularity, since almost every entrepreneur on earth wanted to make lemonade out of the lemons life was throwing during the pandemic. But what are the most common mistakes entrepreneurs make that can cause the downfall of their start-ups?
The mistakes can go from risking too much to not risking enough, not knowing how to develop a brand, and owners not knowing how to use targeted marketing.
This issue is more relevant now than ever since according to the US Business Formation Statistics, 4.35 million companies were opened in 2020, which is the highest spike in start-ups this decade. But at the same time, only 56% of these star-ups will make it past their fifth year.
That’s why learning from your mistakes is good, but learning from other people’s mistakes before you have to make your own is ideal. So in this article, we will talk about the most common slip-ups entrepreneurs make that you should avoid
- Unrealistic Planning and not being happy with “good enough for now”
In a time where everyone is trying to become the next most successful business owner, unrealistic planning is a common weakness. A lot of people think it’s enough to have a genius idea and determination, and beyond that, you just go with the flow.
But a realistic business plan is imperative to track expenses and investments, plan for funding, and set up realistic goals regularly so you can keep track of how well your business is doing.
Yet, setting up a to-do list with “grow 50%” written on it does not constitute a “realistic plan”. You need to put in the effort to research your field, see how well the competition is doing, how your profits have been growing, and come up with numbers to set up your goals.
At the same time, many entrepreneurs worry too much about perfecting the brand and products at the very beginning of production. This overthinking in the planning phase can delay the launching too much, to the point where you can lose money and not be able to launch at all.
A good tip is to do your best but understand when to say “this is good enough for now”. Once you put a quality product in the market, your customers will start giving feedback and constructive criticism, you will understand where to improve for the next batch while also profiting to keep the business afloat.
A young start-up shouldn’t be worried about making their reputation perfect and winning over everyone. In the first stages, the focus should be on getting your product out there and becoming more financially stable. Whatever gets you there, is good enough.
- All product, no branding
Selling your products is the main focus of most start-ups, owners come up with a great idea that is going to revolutionize an entire field, and they end up losing sight of how important building the brand is.
Tesla, for example, isn’t just all the revolutionary self-driving cars, it’s one of the most well-known and robust brands in the United States that could start selling coffee tomorrow and make a profit out of it.
That’s because healthy companies have more than a commodity to sell, they have personality, unique culture, and they can sell a new idea for the future.
Building a brand can take more time and effort than perfecting the product. Because it’s more than launching an app and making a logo, it’s about what the general population thinks of your company, how they feel when they see a new advertisement.
This process can take years and involves a lot of adapting. You won’t get it right the first time around, people are going to have criticism to give and after a lot of adjusting you’ll be able to understand which groups you’re product is tailored for and how to make that public happy.
- Poor marketing
It’s incredible to see how many company owners don’t know who their target audience is. Most have a general idea, but it takes a lot of research and adaptation before you find your best public.
A good first step is to get your product out there with some targeted advertisements on social media. With time, you can learn what the customers like and don’t like about the product, and you can also learn which people are relating to your idea more.
Is your audience men, women, young or professional? What other products are they buying? What interests do they generally have in common? Then, you can find out what is the best platform to reach those people.
All of that can lead to a great marketing strategy, where your team can combine those aspects into a product tailored-made for your most loyal customers.
The truth is that you can successfully sell an imperfect product with well-targeted advertisements, but you cannot sell the perfect product without a targeted advertisement.
Avoiding classic mistakes
Don’t try to do everything alone
Being your own boss is the most common reason people open start-ups, but that doesn’t mean you need to bear all of the responsibilities alone. 10% of start-ups fail because of burnout, so make sure you don’t sacrifice your productivity and mental health.
Find trustworthy professionals that can help, advise, and lead you to a better path when you’re overwhelmed.
Hire diverse people
The confirmation bias can be a poison to young companies that haven’t gotten their foot into the market yet. If you only have people around you that think alike, no employee is going to spot errors in the production or marketing.
Mistakes like these can be recognized before the market if you hire people that aren’t afraid to give opinions and think differently.
Form partnerships from the beginning
Partners aren’t simply providers of money and capital, they are new customers, better business plans, and innovative ideas.
By reaching out to well-established companies for partnerships, a start-up can have a much smoother sailing and be more secure in the market.