Starting up a business of any sort is never likely to be easy or straightforward. In fact, the knowledge that so many startups fail within a matter of months is part of the appeal for many people in giving it a go. Here are some common pitfalls for startups.
But, while the road to lasting success might always be rocky, there are certain common pitfalls that are best avoided at all costs if you’re keen to make it past startup mode and into the realms of sustainability and growth.
Here are 5 of those most common pitfalls:
1 – Failing to prepare
One thing that is absolutely imperative for a startup company in any sector is to work as hard as possible at understanding the market you’re aiming to enter, your target customers and your prospective competitors in that space. Knowledge in these basic respects is essential to giving your company a fighting chance and it ought to inform every move you make in the early stages of development.
2 – Taking on too little or too much advice
There is a balance to be struck when you’re starting a new company between listening too much to other people’s opinions and not listening enough to the advice of relevant parties. Startup scenarios demand a great deal in terms of leadership and decision-making from entrepreneurs who may or may not be ready for that challenge. If you can tread the line between getting help as needed and trusting your gut then you’ll be giving yourself and your company a much better chance of making progress.
3 – Staffing up too soon
A solid sense of optimism might well be a prerequisite for anyone aiming to get a startup company off the ground but it’s vital that a positive outlook doesn’t translate into taking on too many employees too soon. Responding to the demands of relatively rapid growth is tough but many, many startups have found themselves in serious trouble after filling their ranks and raising their overheads before their business was really ready for it.
4 – Taking on too much debt
Financial management can present a world of difficulty and all manner of challenging scenarios for startups but staying the right side of realistic expectations is crucial if you want to be in it for the long haul. Tempting as it might be to maximise the scale of borrowings taken on in the early phases of development, fledgling companies should only look to take on debts to the extent that is necessary, not necessarily to the extent that is possible.
5 – Difficulties with delegation
Startups tend to have a small number of people or just one person driving the ambitions of the new business forward and shaping the company as it develops. The level of commitment and the quality of the ideas from these individuals might very well be what gives a startup a chance at becoming sustainable. However, of equal importance is an ability to delegate tasks as necessary when the time is right to do so. Too much control-freakery and not getting enough rest are common problems and major potential pitfalls for anyone aiming to turn their startup into a success.
Mark Halstead is from Red Flag Alert, part of the Begbies Traynor Group, and is now in his 10th year with the business. He’s worked at companies across the financial services industry and is a fellow of the Institute of Sales and Marketing.