In the digital 4.0 age where the internet has made everything possible, everyone dreams of being a start-up founder or business owner. The internet has created opportunities for many founders, start-ups, and SMEs that could previously not afford to sell in traditional brick-&-mortar stores. Some of these opportunities include leveraging social media and a huge digital market, reducing marketing expenses, and the ability to segment and target customers easily. Yet, eliminating the need for an actual storefront might be the least of your worries if you are a founder. With a business comes various kinds of costs such as marketing and advertising, overheads such as printing and mail, hiring of web developers, and other direct or indirect staff costs. Thus, it is always important to carry out due diligence before actually launching your business and pouring in finances.
According to an article on Embroker, about 10 percent of start-ups fail in the first year, making it an even 5 percent of start-ups failing in the first 6 months. Businesses are traditionally thought to break even after 6 months. However, this is subjective given that some businesses may have started on the wrong foot after all. Every new start-up always has doubts and risks that linger, even with a solid business plan. However, there are common pitfalls that founders can avoid to minimize exposure to such risks and eliminate any doubts.
Here are 9 reasons why your start-up might not make it past the 6th month.
1 – Leaking Holes All Over Your Business Plan
Start-up founders and entrepreneurs might be some of the most talented people on earth. But, unfortunately, some of them suck at developing business plans, which is crucial for business success. A business plan coupled with a SWOT analysis and financial assessment will tell founders exactly where they are, their customers, the competition, and their margins of operation, among other details.
Anybody that fails to plan plans to fail; therefore, any competent and serious start-up founder must have a business plan. Any student who wants to be successful can also plan ahead for their essays and academic writing tasks with the review on privatewriting services.
2 – Investing Insufficient Start-Up Funds
Lack of funds for working or operational capital is a big reason many new businesses go under sooner rather than later. Maybe some costs weren’t factored in, or pricing margins were not done correctly. Ergo, the importance of a business plan that also clarifies funding options.
3 – Lack of Beta-Testing Your Idea and Premature Scaling
At opposite ends of the start-up, are beta testing and scaling. Beta testing ensures that you have the right product that works. For example, many start-ups have tried creating apps that provide mobile games in education, yet not all start-ups get the product right. On the other hand, scaling only comes after you are sure about the product and the market. Lack of beta testing, say for a tech product or service, and premature scaling, for example, new product locations, can both have disastrous consequences.
4 – Lack of the Right Talent or Management at the Start
Tech start-ups typically have CEOs and CTOs, with one handling business and the other handling product. As a sole founder, you might not have this luxury. Outsourcing some business functions, for example, bookkeeping, might save you a ton in the end.
5 – Not Being Mentally Prepared to Go the Startup Route
A start-up isn’t necessarily the same thing as a small business, although both have been foundered. Instead, a start-up is a medium-to-long-term commitment that requires a drastic change in lifestyle, salary, working hours, etc. It needs a whole new level of commitment, unlike a small business that might be run passively.
The first few months are usually the toughest for start-ups; therefore, mental preparation is key to survival.
6 – Not Honoring Your End of the Deal
Referrals are key to the survival of start-ups and new businesses. A deal gone sour can quickly cost you customers, and therefore revenue streams turning the ground upside-under.
7 – Investing Too Much in The Person and Not the Product
The Silicon Valley culture of cultic and charismatic founders has heavily impacted the new breed of founders. But, unfortunately, this leads to too much investment in the personality and not the product. The shrewdest of these charismatics can keep up the sham for a while, but it always goes bust (Wink Wink Adam Neumann and Elizabeth Holmes!)
8 – Not Keeping Business and Personal Expenditures Separate
Pay yourself a salary, retain profits, and pay yearly dividends at break-even point if you want to survive. Always keep business and personal expenditure separate.
9 – Giving up Equity Too Early
Angel investors and VCs bring crucial funding to the table for start-ups. However, they may also need a founder to change the original vision and product to secure their ends. This may be detrimental to your start-up in the short, medium, and long term.
Success for Start-ups Eventually Brings Many Rewards
For new businesses and start-ups, the first 6 months can feel like the deep end of the pool. However, following these 9 tips will ensure that you as a founder are closer to your original vision and on your way to greater financial reward.
About
His peers know Tim Canela as the king of writing for start-ups and businesses. His articles have helped numerous start-up founders and business students improve their positions by providing benchmark writing from his own experiences running two successful start-ups.
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