Startup Shutdown: Small Business Killers
Executives wishing to become entrepreneurs as a viable career alternative, must be aware of challenges and pitfalls facing start-up businesses. It is worthwhile mentioning that nearly 75 percent of new startups in the U.S. fail, according to research from Harvard Business School’s Shikhar Ghosh. While that’s a sobering statistic for a new business owner, it is also a source of information about how to take their business to a successful launch. You can learn from others’ experiences by understanding these common startup mistakes.
Insufficient Market Research
Startups might be based on a new product or service idea that they feel is what the consumer wants, but without sufficient market research, they’ll be founded on speculation. Consumers have the final vote on the usefulness of a product with their wallets. Moving ahead without good market research is a common cause of failure, notes Forbes.com.
Get out of the office and find out what consumers think of your product or service. If you have an idea for a new running shoe, set up a booth outside of health clubs, show a prototype and get feedback. Ask what consumers like and dislike about it and what they would change. You may find that the design has major flaws or that it is perfect but the price is too high. Going to market with either issue will risk that product’s future.
A Weak Business Plan
A list of business startup mistakes in Inc.com places a weak business plan at the top. Lack of detail on the company’s background, product information or how the company will scale growth leaves potential investors with little on which to make a decision. If you’ve done adequate market research to have a viable product or service then you need a strong business plan to show how you will make it happen.
A good business plan will include:
- An industry description
- An analysis of competitors
- A product design and development plan
- An operations and management plan for the company
- A financial risk and goals section
The reader of the plan needs to come away with an understanding of your industry, your product, how your business model will make all of this happen, and the potential for future growth. Investors need to come away with the belief that you can make all of it happen. The U.S. Small Business Administration has detailed information on developing each of the sections of a business plan.
Not Enough or Not Targeted Networking
If you’re not rubbing elbows with the right people, then no matter how good your business plan, you won’t find the support you need. Get out to industry conferences and networking groups and meet people in the business. Learn which investors to target with your product. Research the competition and find out where they have connections, because you need the same people in your address book.
For your running shoe, find the health organizations that promote running. Meet with health clubs and sports equipment manufacturers. Find anyone and everyone in your community that’s interested in running shoes and meet for coffee. Get your contact information into their address book.
A Work-Harder-Not-Smarter Approach
Some startup owners try to do everything themselves. This takes your time and attention away from the really important things like quality and networking. Find free or low-cost applications and services that do the mundane work for you to free up your time.
Products such as Zoho customer management and invoicing are inexpensive ways to track customers and billing. Address standardization with QAS saves you time and reduces lost shipments. MailChimp will let you do email marketing campaigns free for up to 2,000 addresses. These and other products are available to organize your operations so you can focus on your company’s growth.