The excitement of starting up your own business can cause problems down the line if you don’t plan carefully around your product and service offering, and the launch itself. You also need a breadth of business savvy skills to run the day to day operations. While it is fabulous to enjoy a hobby or creative venture, turning this or anything else you love into a business can be fraught.
Yes it helps to love what you do, and many swear by it. However, loving what you do isn’t enough. Here are some obvious and not so obvious mistakes that occur and can result in business failure or, at the very least, cause disruption and problems down the line. They also impact the bottom line.
Understanding these common problems is the first step in avoiding them.
There is no market
Falling in love with your own idea can be the first killer to any start-up. Too often the founder loves their idea so much they are unable to bend or modify it, or leverage knowledge directly from the market for the true opportunity that exists. They may also miss key signals that there is no market opportunity at all.
According to a study 75% of start-ups will fail, and there are many reasons why. One is that there is no market for the product or service in the first place. Research of the market, customer demographic, product or service concept, positioning and communication messaging is essential. While you don’t want analysis paralysis - where you spend so much time researching you forget to do something - knowledge that turns into valuable insight is worth its weight in gold. Set up a test pilot of your concept to evaluate receptivity in the market, and refine elements before a large scale investment takes the product or service further.
Going it alone
When establishing a start-up you wear many hats. You become the CEO, Head of HR, R&D, Manufacturing, Marketing, PR, IT, Finance, and Administration. In fact, you are responsible for understanding and making every decision that supports the business, and juggling these is quite a task. One day you wear one hat, and the next day another. And while you may be efficient and a qualified professional in one area or at the most two, suddenly you are expected to be the expert in all of them.
The key is to make sure you wear them all without letting any fall through the cracks. You will be solely responsible for this until you have resources or investment from others, or can afford to bring in more help. Collaboration with external professionals can add value and take some of the weight off. Use consultants where possible, or decide to go into business with a partner. Splitting the risk and the effort could be the best decision you ever make. Seeking investment capital can also help you to afford the expertise you may need.
Too much or too little planning
Benjamin Franklin is famously quoted as saying “If you fail to plan, you are planning to fail.” This is true, but the opposite also applies as there is a fine line between under and over planning. It’s important to know your strategic direction and the tactical requirements before you implement anything, but it’s also necessary to be fluid in your decision making so you can respond to the information you collect.
That said, without any planning your idea is just that – an idea. It is like having a rudderless ship and hoping it will steer itself in the right direction. For many, business planning is not their forte. The business plan is meant to become a living and breathing document that is referred to and used daily. It sets the vision and all activity to achieve it.
If you don’t know how to write a good quality business plan, then hire someone to help you.
Thinking you can re-launch if you don’t quite get everything right
Unfortunately this is a myth that has caused considerable problems for start-ups in the past. With a new business you only get to launch once, and a successful launch is based primarily on timing.
If a launch turns bad you could have caused detrimental damage to your brand reputation already. Is the market ready for your product or service, or has the market already matured and superseded your idea? Remember, the launch should not be a pilot you use to test the aspects of your offering.
Understanding and planning your launch is a critical component of success. Getting it right the first time involves understanding your customers, your product attributes, the message you are communicating, the right promotional mix, and price.
Ask yourself: What is your unique proposition that will have customers handing over cash, to result in profit for you?
Insufficient cash flow
What is underestimated the most is the financial requirements to get a business off the ground. Cash flow is critical, and needed to support infrastructure until customers and revenue roll in. It is also required to sustain the business during sales fluctuations or seasonal variations. Forecast this in as much detail as you can, and then double it.
Financial stress is the last pressure any new start-up requires. Raise capital to help support the early and growth stages of the business, and keep a close eye on the financials as you can go under quickly without knowing where you went wrong.
Wanting to grow too quickly
Start small and strive to be successful before being bigger. A startup small business wants to become a medium size one, and a medium sized wants to become a large one. Yet each business model has their own unique characteristics for optimal performance, staff management, and overall success.
Too often the belief is that the product is for everyone and that everyone will want to buy it. This is not true. If you master one, do not assume you can master the next. Consult or employ experts who know how to transition a business through its growth, and upskill yourself as part of your own business development. Be comfortable with your success for a while and plan for the next stage before it occurs.
Joanna is the content manager for Canvas Printers Online and a busy Mum of two energetic preschoolers. With a creative mind and a flare for design, Joanna has been passionate about interior design and photography for as long as she can remember. She loves blending these skills by writing about the latest trends and providing tips, tricks and advice for the Canvas Printers Online website.