Starting your own business is both exciting and challenging. There are definitely some pitfalls to watch out for. In this article, we’ll take a look at common startup mistakes and how you can avoid them.
According to Investopedia, about 45 percent of new businesses fail within their first five years. It is difficult to get clients, suppliers and capital for the first few years. So how can you start and run a successful startup? By avoiding the following startup mistakes. 👇
1. Lack of business plan
If you don’t have a business plan to stick to it can be difficult to reach your goals. A business plan is a document that outlines what your business will be doing and how you’re going to make money.
To make a business plan you should map out your operating costs, how much you’re expecting to earn from sales, who your clients are and why they should purchase your product or service.
Your business plan should include:
- strategies, like a sales and marketing strategy
- an analysis of your industry, competitors and clients
- the funding requirements of your business
- a company overview
- structure and management information
- your financial plan for the next three to five years
Business plans are also a way to attract investors, understand the competitors you’re facing, and minimize risks. It’s essentially a plan to manage your business better.Â
See also: 10 reasons why you need a business plan
2. Poor market research
Another startup mistake is not doing enough market research. Firstly, you need to know whether there’s a market for what you’ll be selling. You’re excited about your idea, but it’s important to make sure that others are too.
This is what you get when you do market research:
- Knowledge of what clients are looking for
- Info about to reach your clients
It might also be a good idea to test your products or services before you decide to make it a business. You can do this by user testing, having a beta version available for some users, or testing your idea out on family or friends.
3. Not getting paid on time
When you start a business, it’s easy to become engrossed in developing your products or services. The excitement of perfecting your product or service can lead to startup mistakes, such as forgetting to send and follow up on invoices.
This can result in delayed payments, which can strain your cash flow. In fact, getting paid on time is crucial for the survival and growth of your business. To make invoicing easier, try using free invoice software to create, send and follow up on invoices. This will help you get paid on time—or even get paid early—and maintain a healthy cash flow. Conta is completely free to use.
Create invoices for free4. Being impatient
Getting traction with clients can take time, and you might have to be patient at the start. Try to see it as an opportunity: You can take the time to test your products and get feedback before you scale up.
Success rarely happens overnight, and expecting immediate results can lead to you to make some startup mistakes. For example, if you get impatient, you might give up on sound long-term strategies and instead make impulsive decisions that aren’t good for your business.
Knowing that growth and success happen gradually helps you make thoughtful, long-term decisions, which will establish a stable and successful business.
5. Inadequate online presence
Having a strong online presence is almost always essential for a business to do well. If you’re not online it severely limits your reach and visibility. Potential customers often turn to the internet to find products, services, and information about businesses. If your online presence is weak or nonexistent—if you have an out-of-date website or a Facebook page that you haven’t posted to for years—you’ll struggle to attract new customers, and maybe even keep the ones you have.
Your business should at least have
- a well-designed website. There are many services like Squarespace that help you set up websites.
- active social media profiles. Which ones is best for you will depend on the age rage and user type you’re trying to reach. This is how to use social media to promote your business.
- positive online reviews, either on Google or on Trustpilot. It’s a good idea to have a Google Business account so customers can easily access your contact information and also leave reviews. Make sure to provide good customer support to gain good reviews.
Conta has made invoicing a breeze with its ease of use and all-in-one tracking, simplifying my invoice management tasks and keeping everything super organized.
Lamha Bijili
Game designer
6. Wasting money
One of the most common startup mistakes is spending money too much money on the wrong things. When starting a business, you want to make sure everything runs smoothly, of course, but you might have to do it step-by-step. Spending a lot of money on software, packaging or offices when you don’t have a solid income can lead your business to fail before you really get started.
You should set up a budget that outlines all of your expected expenses and your income so you can see whether you can afford these expenses now, or whether you have to cut back or postpone some of it for later. Get started with a free budget template.
It’s also easy to be wowed by the latest gadgets or software solutions, but you might not need all the fancy bells and whistles. Instead, start with basic, cost-effective tools and then consider upgrading as you go.
One of the most important things you need is invoicing software. You need to be able to charge for your products and services. However, it doesn’t have to cost a thing. We’ve made our invoice software completely free of charge to help your business get off on the right foot.
Create invoices for free7. Forgetting about your clients
Among the many startup mistakes one error stands out: Forgetting about your clients. This can destroy everything you’ve planned for.
You should invest in market research to understand your target audience before you start your business. Identify pain points, behaviors and preferences. This makes it easier to create products and services that actually meet their needs and to ensure customer satisfaction. Once you’ve started, make sure to connect with clients to understand their experience and to get suggestions. You can use social media, surveys, and direct feedback, or even set up user interviews or usability testing.
User interviews help you learn who your users are, what their experiences are like, and what they need, value, and desire.
— Maria Rosala and Kara Pernice, NN/g
8. Underestimating cash flow
Another important, but often neglected part of starting a new business is managing your cash flow. Ignoring your cash flow can put your entire business at risk.
Managing cash flow means tracking the income and expenses of your business, to ensure that it balances out, and that you, hopefully, are making a profit. Good cash flow management requires that you constantly review your cash flow statements to look for potential cash shortages in advance. Note that it’s helpful to estimate slightly higher costs than you expect, so that you have a buffer for unexpected expenses.
Another thing you can do to prevent cash flow issues is getting prompt payment from clients, and you can even consider offering discounts for early payments. You can also negotiate favorable payment terms with suppliers to retain cash for longer.Â
See also: The ultimate guide to liquidity and cash flow
Pro-tip: Get paid on time with good invoice management
The main ways to get paid fast is:
- Send invoices immediately
- Send invoices digitally, rather than in the mail
- Set clear payment terms, so there’s no confusion
- Follow up on overdue invoices
The free invoice software from Conta helps you can get paid on time or even early. You’ll get notified when payments are overdue so that you can follow up with clients and make sure you get paid.
9. Not investing in marketing
If you neglect to do any marketing it can hinder the growth of your business. Marketing is not just another expense, but an important investment that showcases you product or service to potential clients. Many potential clients are looking for products or services on Google or on social media. Spending some time and money on marketing can help them discover your brand.
A great way to start is to create social media channels, setting up a nice website where you can collect emails and send newsletter, and advertising on social media or on Google. Spending time on marketing, will also help you get a better understanding of your clients and the trends in the market. That can help you make better business decisions.
10. Ignoring competitors
One of the worst startup mistakes you can make is ignoring your competitors. If you don’t know what your competitors are doing and what’s trending in your industry, you’ll miss out on good marketing and sales opportunities.
You should analyze your competitors strengths and weaknesses so that you can carve out a unique niche that sets you apart. Doing this work will probably help you discover additional client needs or underserved demographics that you can target with tailored offerings.
See also: 7 tips to succeed as an entrepreneur
Your path to business success – how to avoid startup mistakes
If you want to launch a startup, it’s important to recognize that starting a business is a journey, not just a one-off effort. But if you set aside enough time for planning and research, and steer clear of these common startup mistakes, you’ll have great chances to start something successful.
Ready to get started?
Running a business can be challenging, so why not make invoicing easier? At Conta, we’ve made our invoicing software completely free of charge. Join over 70 000 satisfied businesses and simplify your invoicing today.
