Nobody ever said that starting up a new company should be easy but there are common business startup pitfalls that can easily scupper a fledgling operation and leave ambitious new businesses facing uncertain futures.
Here are four such pitfalls to look out for and avoid if you’re in charge of a start-up operation in any sector:
1. Borrowing too much
Securing finance can often be the difference between being able to incorporate a new business and seeing your enterprise ideas stalled at the planning stage. But there are real pitfalls to look out for in this context even when a new company is able to attract and secure the funding they need. In particularly, business bosses should be wary when they are able to borrow large sums of money and lofty assumptions are being made at an early stage about future revenue and earnings prospects. To put it simply, a new business ought only to borrow what money it needs to develop and not whatever amounts it can borrow later down the line.
2. Lacking preparation
With so much information, content and detail available on every conceivable enterprise issue online these days, there is really no excuse for not doing your homework before launching a new venture. Knowing who your target customers are, who your competitors will be and how the key trends in your markets are developing should be high on the list of priority areas to study up on and no stone should be left unturned.
However, even doing all the research in the world is no guarantee of success when it comes to establishing a start-up but failing to prepare as fully as possible is very likely to limit your company’s chances of achieving sustainability. The reality is that a lack of preparation is among the most common causes of start-up failure and of seeing a promising business finding its way into financial difficulty.
3. Starting too soon
Ambition, enthusiasm and a certain confidence in your abilities and your ideas will always be valuable when it comes to starting up a business but a degree of caution can also be a key ingredient in success. Balancing optimism with prudent restraint is vital and never more so than when it comes to the question of precisely when to get started and when to launch your new business in earnest. In some cases, unfortunately, starting your start-up too soon can be a disaster. Consider a soft launch in your spare time to get the wheels in motion, rather than giving up your old job and jumping in at the deep end.
4. Expanding too fast or too slow
Starting up a new business often requires a good deal of personal effort on the part of a few key individuals but not knowing when to accept help and support is a common fault that can bring down a new company. The problem is that sustainable growth can be a difficult trick to pull off and taking on too many or too few staff members can each have equally damaging effects on the finances and, ultimately, viability of new companies.
Keith Tully from Real Business Rescue is a leading corporate insolvency specialist. He has over 25 years’ experience in advising company directors in times of financial uncertainty.