If you haven’t heard the news, the statistics in relation to start-ups are pretty terrifying.
In short, unless you get your strategy right from the outset, the chances of failing are extraordinarily high in those first few years.
Of course, there is an element of luck as well, but in general you are in complete control of your own destiny.
If you haven’t been involved in business before, it can be easy to fall into some common traps. Today’s guide will take a look at four of these traps to make sure that you maximise your chances of success in those opening years.
Mistake #1 – You have a bedroom mentality
What do we mean when we refer to the “bedroom mentality” you might ask? Well, as we all know, a lot of businesses have turned out to be very successful after initially starting out in a bedroom. However, there is only so far that this approach can go.
It might work for the first couple of months, but if you are making progress this is going to be an extremely short-term solution. Over time, you will need to look at the cost of a self storage unit, or even office space, just to allow for your increasing requirements.
If you don’t, you will find that you have grown too fast, too soon – and this is one of the surprising reasons a lot of businesses fail.
Mistake #2 – You hire too soon
In contrast to the approach discussed in the previous section, some companies may rush into a recruitment drive without preparing properly, resulting in the hiring of unskilled and inexperienced staff who are unable to help the company grow. To avoid this mistake, companies must follow a strategic sourcing management process, including steps such as identifying, evaluating, and selecting suitable candidates who can bring positive advances to the company.
Still, there are companies that tend to do recruitment at a rapid rate, thus making it a perfect recipe for disaster. Staff costs are one of the highest that most businesses have to deal with, and as soon as you enter this world you will feel this. Unless it is absolutely essential, delay this fixed cost for as long as possible.
Mistake #3 – You focus entirely on investment
In today’s age, this next mistake is hardly surprising. After all, we are all now used to hearing about stories of businesses being transformed with high-profile investments – and we all want a slice of the action.
Firstly, it’s difficult to attract such investment – regardless of what the media might suggest. Secondly, and more importantly, this shouldn’t be your primary focus. Remember, your business is worthless if you’re struggling with your product and service, and putting all of your emphasis on investment is going to result in these issues slipping.
Mistake #4 – You don’t rely on contracts
This final mistake is a classic example of small business mentality. Just because your company is small, for now, it doesn’t mean to say that you can’t create contracts.
On the contrary, these are something that will protect you. They are the pieces of paper that will result in orders being fulfilled, and payments being made on time. Without them, all sorts of problems can occur, including the dreaded cash flow one.
