Unpopular opinion: Most start-up entrepreneurs fall out of business within the first two years of commencement. Many that make it past the first two years will most likely not survive the fifth year in business.
While the above remains an unpopular opinion, which is likely debatable, one thing remains imminent in the business of a start-up entrepreneur who fails to plan. He or she is bound to fail. Paramount in any business is the planning phase. Once this phase is not executed or improperly executed, business is bound to fail within the first few months of commencement.
The success of a start-up is not a function of luck. It is also not tied to how good you are with what you do (even though this in itself is integral to the growth of your business). The success of any start-up is powered by carefully mapped out ‘workable’ plans. For the business to succeed, not only should it have a workable plan, but this plan must be followed to execution.
Over the years, many start-up entrepreneurs have made mistakes that have stagnated the growth of their businesses. Some have even made mistakes, so grave, that have cost the very life of the business. It is very important that beginners in the entrepreneurship business learn the ropes in order not to make those very mistakes.
In this article, we would highlight some of the biggest mistakes past start-up entrepreneurs have made, that might have been the death of their business. Before we highlight these mistakes it is important to define who a start-up entrepreneur is in order to to miss the mark.
Who Is a Start-up Entrepreneur?
A start-up Entrepreneur is a business person who develops new products or services. They introduce these new products to the market after developing them.
Every start-up seeks growth and so the business model of start-ups is always a scalable one. While the goal of a start-up entrepreneur is not immediate profit, he, like every other business person hopes to make profit whether immediately or in future.
To grow, scale-up and ultimately, not fail, a start-up entrepreneur is to run their business following certain principles. Most of these principles apply generally to business, while a few is native to the start-up entrepreneur. When these steps or principles are not followed duly mistakes are bound to happen. These mistakes are capable of stagnating the business and ultimately making it fail.
The biggest mistakes made by start-up entrepreneurs are outlined in the next part of this article.
Mistakes made by start-up entrepreneurs.
The mistakes are outlined below:
- Failure to plan
- Failure to structure
- Absence of a business model.
- Poor monetary decisions.
- Failure to work on their leadership and managerial skills.
- I-dont-care attitude towards competition
- Hiring unqualified labour
- Fear of trying
THE BIGGEST OF THEM ALL…
- FAILURE TO PLAN
A quick and apt definition to plan would be:
“A plan is a structure put in place, that would make your business work even in your absence”
Failure to plan is planning to fail. One of the biggest mistakes, if not the biggest, start-up entrepreneurs make is working without a plan.
Your business plan should be on paper. It is not proper to solely rely on memory when it concerns a business plan. The thoughts and ideas guiding the functioning of the start-up must be well detailed on paper. This would even make it easy to raise funds to run the business. Investors whether debt or equity investors – even angel investors – would want to see a detail of where their money is going.
A business without a plan will fail.
- FAILURE TO STRUCTURE THE START-UP
The functioning of most start-ups is fueled by passion rather than the quest to make quick profit. This is what differentiates them from business owners. It is this passion together with talent that transforms the start-up to a fortune. This irrespective, start-up entrepreneurs must learn to understand that their passion and talent is not enough. Whether they like it or not, they are in business. Businesses must be structured.
Failure to structure is one of the biggest mistakes start-ups make. Without a structure they would most likely not make a head-on. This may succeed in frustrating them and in the long run make them quit.
- ABSENCE OF A BUSINESS MODEL.
To succeed, one must have a strategy. A business model is a major part of a business strategy. In simple terms, it is an outline of steps towards value delivery.
As a start-up entrepreneur, you must put in mind that you are in ‘business’ to deliver value. There must be an explanation as to how you intend creating, capturing and delivering value. That is what a business model is – the theory behind value creation, capture and delivery.
In creating and delivering value, a start-up entrepreneur must ask the following questions.
- What is the purpose for this startup?
- Who are my target audiences?
- What am I offering them?
- What strategy do I intend delivering these offerings with?
- How do I intend to do all these?
- What policies (government, cultural, etc) govern my delivering value?
A start-up entrepreneur that does not have a model for his start-up, whether formally or informally is bound to fail.
- POOR MONETARY DECISIONS
In business, whether as a start-up entrepreneur or a business owner, one must understand that CASH IS KING. No matter how much you spend, make sure you are never out of cash. You must make sure you are not spending more than you ought to.
Also, in a bid to save your money you must also make sure you are not spending less than you ought to when you have the money. Invest financially in your business.
A wise man once said: “Earn all you can, save all you can, give all you can. As long as you can.”
The above principle should also govern the cash flow in a start-up. While your primary goal is not to make immediate profit, you must make you make profits, no matter how little. You must also save to further invest in your growing business. And then, you must give in your business all you can. You must learn to nurture your dream – the start-up – even if it would cost you money. You must be wise when it comes to money matters. Spend your start-up funds wisely and do not be afraid to spend on quality products and people. Doing this pays in the long run.