With COVID-19, corporate downsizing, and remote working on the rise, it’s no surprise that Millennials around the world are actively seeking ways how to make money themselves or find ways to raise money for their start-up.
Launching a start-up is never easy.
70% of start-ups fail within the first 5 years.
These percentages are consistent across all industries.
There are some common pitfalls that entrepreneurs face when they are starting a business.
The #1 reason why most start-ups fail is that their business doesn’t have product-market fit.
Apart from the obvious product-market fit, below are the 5 most common problems startup face:
1. Finance your startup
Every startup needs money to get started.
There are 7 ways you can fund your business:
2. Get support from friends and family
3. Join an accelerator or an incubator program
4. Venture Capital Funds
5. Reach out to the Angels
7. Get a business loan
You need the money to hire a working space, paying staff, marketing/advertising your business, and many more.
A common startup pitfall is underestimating how much money you need to cover all the costs.
Often a new business can get hit with unforeseen costs that can bring an end to a business before it even gets started.
Keep records of your expenditures and invoicing from day 1.
You need someone who can evaluate the rate of spending by your company and forecast the growth potential.
Utilizing accounting software or hiring someone with accounting skills is a good idea for any startup.
2. Create a business plan for your startup
Every business needs a plan, focus, and clarity. You can’t “forget” to plan.
Research shows that planning helps companies grow 30% faster.
It’s surprisingly common how many new companies think of entering the market without a strong arrangement.
Before dipping your feet in the business world, successful entrepreneurs know that a proper business plan will help you to make sure you’re not missing anything.
A business plan needs to clearly define:
• Where you are (against your competition)
• Where you want to be
• How are you going to get there
Every investor needs to see a realistic business plan.
Creating an impressive business plan requires a lot of market research, consultation, and effort.
Having a poor business structure can lead to missed growth opportunities and employee disengagement. A business plan is also important to get startup teams working towards a common goal.
Clearly defining your M.O. (Modus Operandi) will outline your manner of operating.
Don’t forget to emphasize the values of your company. Having a moral objective will help your company evolve and stand out.
Your company values build staff and customer loyalty, too.
NB! Your business plan may change as you grow, so stay adaptable. You also need to plan for the unexpected. That is, even if you can’t prepare for everything, you need to know what you don’t know and hire the people who know what you don’t know.
You have to have controllable estimations of your potential, resources, and market share alongside other factors to succeed in a competitive environment.
If you fail to prepare, prepare to fail. Don’t leave the details to later.
3. Hire the right team early
Your team is one of its key components that will drive the success of the business. Hiring for the skills you need early is super important.
Research shows that strong teams beat solo founders most of the time. You need someone with complementary skills.
A true leader has to pick up the values and personal attributes they are looking for in a team. This aligned focus will form the team with real synergy.
Not having the right people can create bottlenecks and block the rollout of new products and services.
Realizing that you’ve hired the wrong people is a common challenge in startups. This usually happens when startups grow too fast or are run by inexperienced people’s managers.
As a result of wrong hires, the team suffers from growing pains such as lack of alignment and miscommunication.
To avoid this costly mistake, prioritize key hires and think carefully about how each role fits in with your business goals.
Shorten the probation period. Set short-term objectives, and align those goals with wider business goals. Objectives help employees become empowered to make decisions and feel driven in their work. Make sure the work of your employees is contributing directly to the success of your startup, not just their department.
NB! Hire slow and fire fast!
4. Outsource properly
Not all functions need to be hired for internally. Specialist and routine work like accounting, advertising, telesales, and IT – all can be outsourced.
It’s best to pay properly than to pay twice.
Working with an advertising agency will ensure that you get your brand messaging out there using the most relevant advertising channels.
To find the perfect agency for your budget and needs, there are only 4 things you need to do:
- Compile a long list of 10 potential agencies you want to work with
- Read their case studies and online reviews to shortlist 3-5 agencies
- Interview 3-5 agencies via email/call/face-to-face (5 questions provided below)
- Meet the whole team to kick-start the partnership
5. Built, test, and move quickly
All businesses start at zero.
You may have a great business concept but if you languish without customers for too long, you are going to fail.
There is a huge amount of proactive work you can do to give your business a head start, not waste time on unnecessary work, and work on effective marketing.
Having well-thought-out goals will help you achieve results quicker because if something isn’t working, you can try another strategy.
6. Issue company shares to the right people
Limited companies can issue shares at any point after incorporation.
The process of issuing shares must be in accordance with the provisions set out in the Companies Act 2006.
Companies can consider a transfer of shares for many reasons, such as:
• Bringing in new business partners
• Raising capital from outside investors to fund expansion or pay for a new project
• To pay business debts
• To introduce a bonus scheme for employees
• To gift shares to family members
7. Location of your business matters
Rent is often one of the biggest expenditures for a startup, and it can be a huge challenge to find the right location for your business.
There are some important considerations when planning your business location, for example:
Consider the nature of your business
Ask yourself these 3 questions:
• Does your business require a lot of storage?
• Does your staff need space?
• Do you need to be accessible to customers?
Many startups start working from home, then move to co-working or on-demand workspaces, and eventually when established, hire a permanent space in a prime location.
Consider affordable co-working spaces
Finding the right office doesn’t have to be stressful and costly.
There are commercial rental spaces aimed specifically to help startups grow. Wow workspaces in London, for example, are set up to help young entrepreneurs find affordable workspaces.
Do some research. Find out where other successful startups in your space are working from.
There are a lot of opportunities and support for startups these days.
With some proper planning, passion, and a lot of hard work – you can do it 😏