Starting your own business is exciting, exciting, exhilarating, and challenging. Many new businesses succeed, but approximately 50% fail, and only about one-third survive for ten years or more. What are the most common reasons for business failure? Often, the entrepreneur fails their business, not the business itself. Here are the most common startup errors explained by Christopher Salis that you should avoid:
Insufficient Planning
Many businesses do not have a strategy. Your business will struggle to succeed unless you have a short and long-term plan with tangible goals and objectives, including dates and deadlines. Businesses without plans may fail to consider cash flow requirements, growth, management, employees, inventory management, vendors, and other critical factors in business success.
It would help if you addressed all those areas during the planning process. It also enables you (and potentially others) to examine the business objectively and define whether the case is lucrative enough for someone to invest in it.
Products/Services aren't Differentiated and Do Not Deliver Real Value
Businesses must provide value and be better/different from their competitors for customers to purchase or switch. Being a little bit different isn't enough. According to research, a product must be at least 10x better, faster, cheaper, lighter...to truly differentiate itself from the competition and give you a chance of success. So, if your product/service is just a bit better or different, or if it doesn't add value, you're not giving your company a chance to succeed.
Lack of Focus on Customers
The most successful businesses understand who their customers are. Some even give them names and have a mocked-up picture of their typical customer on display so the entire office can keep that image in mind when making decisions. If you know precisely who your customer is, you can also describe how large that target audience is. Most importantly, you can involve your customers in product development so that your products are created based on feedback from those who will pay for it. Your business will struggle if you don't know who your customer is and can't define that person in one sentence.
Leadership Failure
Poor leadership is a significant cause of many business downfalls. When people state, "the buck stops here," they mean that the leader makes the final decision and bears responsibility for it. Leadership failures affect every part of your business, from sales to employee culture, so if you don't have the necessary skills, figure out how to acquire them. Look for a mentor. Improve your business knowledge. Create an effective leadership team. Create an advisory board.
The Takeaway
As explained by Christopher Salis, you're well on your way to success now that you're aware of all the pitfalls of starting a business. Don't be afraid to give it a shot. Never forget you can pivot at any time, and failure only increases your chances of success the next time.