By Julie Hinker, Veterans Business Specialist of the Veterans Business Outreach Center of the Dakotas (VBOC)
About the VBOC
The Veterans Business Outreach Center (VBOC) program is designed to provide entrepreneurial development services such as business training, counseling and resource partner referrals to transitioning service members, veterans, National Guard and Reserve members and military spouses interested in starting or growing a small business. U.S. Small Business Administration (SBA) has 22 organizations participating in this cooperative agreement and serving as VBOCs.
You started a business and you feel like you are on top of the world. You are running in a million directions, but this new journey is so much better than your old job! Being you are a new business owner, you may get so busy with all the new tasks that you forget to stop and breathe.
This can cause you to not see the big picture and slip into some mistakes that can kill your startup business. Every startup makes mistakes and since we are human, there is always something to learn or improve on. To achieve success, entrepreneurs should be aware of common challenges and obstacles that could potentially lie ahead so they don’t make the same mistakes that others have already made.
Julie Hinker, Veterans Business Specialist
As our businesses begin to pick up momentum and propel forward, we can become blinded by our successes and growth causing us to run into unsuspected issues. Keep reading to find out exactly where many startup failures begin and how your business can avoid them!
1. Market Problems
A major reason why startups fail is that there is little to no market for the product or service they have created. We must have a compelling value proposition to cause the buyer to fully commit to purchasing. Is your product or service a Vitamin (nice to have) or an Aspirin (must have)?
Additionally, poor market research leads to misunderstanding the target audience, which leaves you with a product that no one wants. It is critical that you create a product that fits into the market, so don’t invest too much time and resources before you are confident that people want whatever it is that you are offering.
2. Not Focusing on Your Main Idea
So… you had a great idea and built a company around it. Now, your mind is wandering and exploring other ideas that might take your company to the next level. STOP! Building a company takes time, money, effort and—focus. If you are one that is easily distracted or has trouble finishing what you started, your startup might end up in the percentage of startups that didn’t make it to the finish line.
These new ideas that are blinding your main vision could potentially lead to more success; however, do you really have the time, energy and resources you need to invest in it right now? Avoid biting off more than you can chew early in your business start up. There will be plenty of opportunity to expand once your ship is sailing smoothly.
3. Ignoring Branding
If I told you that the best startup idea would fail in today’s market without design and branding at the core of the product, would you believe me? In this fast-paced and ever-changing digital world, entrepreneurs need to consider how design can influence human behavior and how to brand their product to ensure it stands out in the digital space.
Building an authentic brand is not easy, but it is a necessary element for businesses entering this competitive digital market. The best plan of attack is to create a vision for your brand from day one instead of treating it as an afterthought.
4. Hiring the Wrong People
Talent recruitment is the backbone of any business. You could have the best product or service in the world, but if you can’t find the right people to fill positions in marketing, sales, distribution, etc., your business could fail.
Hiring the right people is important for every organization, especially for small businesses and startups with fewer employees. The people you hire will be a significant part of your success. They are either going to push your business forward, or they’re going to bring your company down. Therefore, this is a critical aspect to the success of your business.
A small piece of advice when hiring employees, “choose wisely.” Getting the right employees on board will ensure they will grow with you, contribute to overall success and hopefully reduce the need to hire again and again.
5. Premature Scaling
Premature scaling can be referred to as spending money beyond the essentials of growing the business (e.g., hiring sales personnel, expensive marketing, perfecting the product, leasing offices, etc.) before nailing down the product and market fit. We see a lot of startups dying because even though they are doing good things, they are doing them out of order.
Premature scaling will use up your cash more quickly leaving you with a smaller path to discover that you were wrong and need to readjust. Try to think of it like a baseball game… the old model of entrepreneurship was to throw all your money into taking one big swing whereas the new model is preserving your cash, so you have as many swings as possible to try and hit a home run.
Although it may sound ideal to move fast and completely dominate an industry, more often than not this leads to an unsustainable pace and ultimately failure. A great way to maintain a healthy pace is by hiring quality staff only as needed.
6. Running Out of Cash
You need money to make money, but more importantly, you need to understand how to manage that money to keep it in the first place. One of the biggest issues that we see startups face is running out of money before they can make any positive strides forward.
Even those that are lucky enough to secure funding can still be confined to a short runway of time before they are needing more to pay their bills. Cash is the lifeblood of your business. If you don’t have enough of it, then your business will slowly fade away. Some say, “Cash is King,” but entrepreneurs should be thinking, “Cash Flow is King.”
7. Failing to Put Together the Right Team
You are the founder, heart and brilliant mind behind your business. Being the jack of all trades might be your title at the beginning of this journey, but you should know it is only a short-term solution. You can only do so much. The truth is you need a team!
It’s essential that you are selective and strategic about your team. Here are a few tips to help you put together the best team for your startup:
- Hire people that have hard skills and resourcefulness
- Build your team for the long-term company
- Hire individuals that will place your customers front and center
- Know your team member’s ambitions
- Find employees that are hungry for growth and success
8. Not Setting Long-Term Goals
Goals are a vital aspect of keeping your business on track. When businesses don’t set clear goals, the path to the future becomes mudded, making it extremely difficult to stay on track. Setting goals, both long and short, can help you achieve your business goals. Make sure your goals are SMART: Specific, Measurable, Achievable, Relevant and Time-based.
Many startups will often overlook the need for creating longterm goals, but if you want to positively move forward, you need to know where you are going. Plus, you’ll have to be prepared to make fast, yet smart, decisions, and this requires a clear sense of direction that only setting goals can provide.
9. Choosing a Poor Location
Location plays a huge role in the success of a business. Good location decisions can significantly boost a startup’s longterm performance, and poor ones can cost them millions in lost talent, sales and productivity.
Did you conduct the appropriate market research before deciding on a location for your new business? If you didn’t, it might be a good time to head back to the drawing board to make sure the location of your business is conducive to success. Here are six factors to consider when choosing a business location:
- Business rates
- Skill base in the area
- Potential for growth
10. Burning Out
Most entrepreneurs and startup founders do not understand the term “work-life balance” because they are so passionate about their idea. Having a non-stop hustle mentality can put you at a higher risk for burnout.
One of the easiest ways to avoid burnout is by increasing your productivity. If you can learn how to become more productive it will give you back a significant amount of your time, reduce stress and help train your brain to only focus on tasks that will lead to business and revenue growth.
While launching your startup or business idea, consider these common factors that can often lead to failure. All these mistakes noted above can be prevented. As an entrepreneur and founder, you may have the perfect product or service, the best employees and all the money you need, but ultimately the success of your startup relies entirely on your perseverance. At the end of the day, there is only one thing that can truly kill your company, and that’s when you decide to give up. Your grit keeps you going to achieve your goals. Stay committed, persevere and never, ever give up!
Great entrepreneurs make things happen and move quickly to seize opportunities.
Do you have a great startup vision or idea? We encourage you to reach out to VBOC of the Dakotas to help you get started today. We provide no-cost business advising, business ownership options, start-up logistics, business plan development, budgeting and financial projections, financing solutions and operating strategies.
VBOC of the Dakotas
Phone: (701) 738-4850
Address: 4200 James Ray Dr Grand Forks, ND 58201