3 Detrimental Mistakes to Avoid When Starting a Company
Starting a company or a startup isn’t all about the fascination of creating something, networking, or celebrating growth. Some frequently overlooked considerations led a lot of great teams into bankruptcy. Here we want to review some elements, which avoiding them decreases your failure chance.
- Over-inclusiveness: We usually hear that it’s better to make things easier to start, push barriers away and pave the way for everyone to embark on. But not in entrepreneurship. Initially, if the product delivery is the business’ main goal, it’s not much of a concern how you get things done. Finding the customers’ real problem, coming up with a genuine solution, and a proper product/market fit has higher priority than finding the best teammates, documenting the process, and establishing a fabulous brand. Fitting you in the market’s demand is what every aspect of the business should be doing. Otherwise, if creating a valuable service, establishing a credible brand, and an ongoing customer relationship enhancement is your duty, don’t sacrifice quality over quantity. If someone couldn’t afford your team’s required skills or lack the financial competency to be your investor, leave them behind. In this case, being selfish and pragmatic distinguishes feeble business people from capable value-creators.
- Incomprehensive Corporate Governance Document: We usually hear about the importance of a business plan, but above that, there’s an internal document that defines the mechanisms and procedures that the company’s executing framework has built on. In the moments of crisis or any tipping point that the enterprise has to deal with something unprecedented or decide between nuanced options, this is where a predefined corporate governance guideline comes to play. Everyone has an apparent reference for decision-making, and conflicts could be handled much easier with this in action. It also defines the values, regulations, restrictions, and stakeholders’ relations. It’s all about knowing what you have, what you want to do, how you’re going to execute them, and what you’ve already done. Have enough documents that answer these questions without putting you under many bureaucratic procedures. Of course, if you’re a seed startup, you need much fewer guidelines than a well-established company with a lot of complex corporate structures.
- Insufficient Financial Support: Don’t ever say to yourself we will start this with whatever we have in hand, then figure out other investments, or we might make a proper income stream that covers our expenses. It’s an unlikely event you can afford to initiate something with inadequate earned or planned financial support and have enough resources before the burn rate prevents you from executing the day-to-day tasks. If you get stuck in gathering resources to survive, you’ll lose the opportunity to think forward and plan for taking advantage of the promising open windows. Money is the blood of the business body; you could tolerate a shortage for a short period but get hard-to-remove damages that affect your business much longer. It divides into enough assets and liquidity. You have the necessary credit to cover up your business in boiling points with sufficient assets. You can take advantage of the prompt opportunities you see with enough liquidity, which could go away if you don’t act immediately.