By definition, a startup is a company in its initial stages of development.
A lot of people like to add some pizazz to the definition of startup by throwing in words like entrepreneur, creative, disruptive, and innovative.
Regardless of how you define a startup it is all about business and achieving a goal. To achieve a goal you have to first define it.
Bad Planning
To achieve a goal you first need to define it. A lot of startups fail in the first year due to bad planning.
The first step towards a successful business is to define a solid business plan. A good business plan isn’t only necessary to get funding but will also open your eyes to potential problems you could encounter down the road.
The basic questions you should be asking yourself are:
What is the problem I am trying to solve?
Who is my target audience?
What are the monthly costs like salaries, lease, software development costs, and maintenance?
How much must I sell to break even?
Most important of all, when planning never forget Murphy’s Law – what can go wrong will go wrong.
Weak Implementation
The best plan is worth nothing unless it is properly implemented.
A mistake many young entrepreneurs make is trying to do everything alone. Coming up with a good idea is one thing but getting a startup off the ground is a completely different ballgame.
Get professionals to do the job they were trained to do, in the long run, it will always be cheaper to hire a professional than to try to improvise.
Do not shy away from outsourcing specific tasks. Look for a company that specializes in software development for startups so you do not waste time and resources going through a trial and error cycle.
If you have a physical product that has to be shipped to clients, look for a logistics company that will overtake storage and shipping. Do not underestimate the amount of work that goes into packaging and shipping.
Insufficient Finances
The sole purpose of a business is to make profit, some are not very successful at doing that, but it is still all about money. Profit is simply what is left over after you pay your expenses. As simple as it is, a lot of entrepreneurs do not get the concept.
No matter how cool your product is, someone should be willing to pay more for it than it costs you, or it is not a business. There are exceptions like Whatsapp, but also in their case, someone is willing to pay the bills because of the potential.
There are a few common mistakes that you can pay attention to and hopefully avoid unnecessary financial despair.
Be realistic when calculating the potential income and the fixed expenses. I doubt that anyone can truly predict how a product will sell, so be conservative when it comes to the numbers, except when talking to investors of course. On the other hand, some expenses can be more than you imagine. Software development for startups is more complex and expensive than for an established company. Utility costs, taxes, and necessary insurances are expenses that are often overseen.
Avoid leasing office space that you do not need, expand when you need to, not because you wish to. The same goes for hardware, furniture, cars, and whatever else you can buy for your business. Many startups have blown their initial funding on “fun” stuff and were left with no funds to continue the business.
Wrapping Up
If you have a dream or great idea, then go for it. There are no guarantees in the business world, but due diligence, flexibility, and good planning will increase your chances of success.
