By Steve Strauss
Unless you are a serial entrepreneur, you are bound to make mistakes when you start a business (and even they make a few.) Some mistakes are minor and become part of the trial-and-error new entrepreneur learning process. Other mistakes can cripple your new business.
But which is which?
Having started three business (two of which have been successful), here are my top five startup mistakes to avoid:
1. Underestimating startup costs
There is nothing worse for a startup – I mean nothing worse – than beginning a new business and not having enough money to make a go of it. When you start a business, you put a lot on the line: Your name, reputation, money, other people's money (probably), your family’s future . . . and that’s just for starters. So you have to give yourself the best chance possible of making a legitimate go of it.
You do that by budgeting enough money. That means, first of all, having at least six months worth of family income in the bank before opening the doors (giving you a bit of time to get started, get a few customers, invoice, and get paid). It also means having operating capital for the business and budgeting enough for marketing.
2. Failing to have a marketing strategy
Starting a new business is like being alone in a dark room – you know you are there, but no one else does. The only way to turn on the light and tell the world (including potential customers) that your business is open is by advertising and marketing. And then advertising and marketing some more.
So come up with a marketing plan before you ever get close to opening the doors. How are you going to let people know you are out there? What will your offline, online, social media and other marketing strategy be? There are no shortages of good ideas out there and it is your job to learn what they are, make a plan, and try some out. And then try some more.
3. Blowing your dough
If you are starting a business, it is likely that you have some money ready to spend. Either you got a loan from the bank, or Uncle Joe, or you sold some assets, or whatever. But whatever it is, you likely have some money that you will be spending on rent, inventory, computers, etc.
Slow down there, cowboy.
Nurture your capital. Make it last. Be frugal. One of the biggest mistakes you can make is taking that bundle of money and spending it unwisely. It is going to take a while before profits start to roll in, so keep your overhead low and take it easy.
4. Choosing wrong
There are few times in life when you can start a new business from scratch, so make it count. You need to choose a business that you will love, that you have a passion for, and one which can make you some money. You may love 18th-century Flemish architecture, but a business that does not make.
5. Doing it alone
Sure, you may have a one-person business, but even then you should not be doing it all alone. You need a team of people with whom to share ideas. Maybe you need a part-time assistant to keep you organized. Consider also creating a board of advisers who can help you with advice, contacts, feedback, and more. You need a team on your side committed to your success. What about getting a SCORE mentor?
Yes, mistakes will be made, but they need not be crippling ones.