Don't Make These 5 Mistakes When Starting Your Next Business
Starting a business offers all sorts of pitfalls. Big ones, like running out of cash or running into legal issues, are hard to ignore. But in the midst of the long nights, major decisions and mountains of paperwork, it’s easy to miss little things that can make a major difference in the long run.
Keep an eye out for these missteps as you endeavor on your newest venture.
1. Failing to do research
A CBInsights study shows that 42 percent of startups fail because they don't address a market need. Tackling a problem that’s interesting to solve may be fun, but it isn’t a path to success.
Before you invest in your business idea, ask yourself what problem your service or product is solving. Then, discover through research whether that problem is common enough — and painful enough — for consumers that it warrants a solution.
Don’t guess; use tools like surveys and focus groups to go directly to customers. Get at least a few dozen responses before making a decision.
2. Not setting expectations
Once you've established a product or service, you still have to set customer expectations. Being clear about what you’re offering and the outcome customers can expect is key.
Think through not just the sales process, but also your entire service. If you were to book a TV-installation service, you might expect them to mount the TV, connect all the cables and demonstrate how it works. If the installer only plugged the television in, you’d be a disappointed customer. Get on the same page with customers before they buy.
On the staff side of things, unclear expectations can cause trouble. To solve this, write detailed job descriptions and review them with your team members. Make sure everyone is on the same page about deliverables and duties.
3. Leaving data on the table
The launch of your business is the best time to start collecting data. Recording everything from customers's demographic details to customer-acquisition costs to your inventory depletion rate is essential.
Decide on which metrics you want to track. Speak to team members about which numbers they should be monitoring. Ask them to add those figures to your database or spreadsheet.
At least once a month, check in to ensure the data is reasonably clean. Times and dates, for example, should be entered in a consistent format. Missing fields should be kept to a minimum.
After that, you’ll need to get the data into a database for analysis. Tools known as “ETL” (extract, transform and load) assist or automate the process of capturing your data from various sources and loading it to your data warehouse, in addition to integrating with popular sales, marketing and customer-service tools.
Tight-knit teams and long hours are part of working at a startup, but at some point, it has to stop. Only leaving the office to stock up on energy drinks isn’t sustainable.
As an entrepreneur, you set the pace. The rest of your team looks to you to set boundaries. Prevent burnout by establishing a culture of taking breaks, eating well and getting plenty of rest.
Research published in Harvard Business Review found timeboxing to be the most useful of 100 common time-management hacks. Timeboxing entails “chunking” the day into 15- or 30-minute blocks and assigning a specific task to each. And make sure to timebox both your work and personal time. Treat making dinner with your family as time that's just as important as an investor meeting.
5. Under- or overdoing digital marketing
Digital marketing is a “fine line” investment. Certainly, you need a website, digital ads and accounts on relevant social media sites. But beware that it’s easy to overspend, both in terms of time and money, on digital marketing.
Start with social media. Trying to have a presence in every space online isn’t sustainable. Instead, poll your customers and maintain accounts only where necessary. If you sell handmade bows, creating Pinterest and Instagram accounts — both image-driven social networks — and setting up an Etsy shop is a more strategic way to go.
Email newsletters are another area where companies commonly over- or underdo it. Email marketing can deliver a 38-fold return on investment, but that's only when the email content is educational and cost-effective. Don’t retain a high-priced marketing agency if you can write the content yourself. Resist the urge to be too promotional.
Seeing your business through launch day doesn’t mean you’re out of the woods. In fact, your greatest pitfalls lie ahead. Avoid falling into these five, and you’ll be better off than most fledgling entrepreneurs.