Don’t make these mistakes if you are a start-up!

Don’t make these mistakes if you are a start-up!

In recent years, one of the most searched business words is “START-UP”. Quite a popular word that is being used as a starting point for many entrepreneurs to fulfill their ambitious dreams of running a business.

But do you know that, as per a report by Failory, almost 90% of budding start-ups fail within a few years of their commencement? Reasons for this? Multiple. From being overambitious to being negligent about the legalities, everything together results in a failing start-up.

Let’s learn more about the startup mistakes entrepreneurs should avoid that result in their failures.

5 Interesting Reasons Why Start-Ups Fail?

Here is a list of five reasons why start-ups fail that you must avoid if you are a growing start-up;

Having Poor Cash Flow Management:

The biggest mistake that start-ups make is poor cash flow management. This simply means that the start-up is unable to manage its finances. About 80% of businesses fail due to cash flow problems. (Fundera) 

This can be a dangerous sign for the growth of the business, as some owners tend to get overly ambitious and fall into deep debt traps, resulting in a completely failed business.

Neglecting Having A Proper Business Model Planned:

Whenever an entrepreneur procures a business idea they are highly advised to go ahead with that idea through a usual route of carefully planning things. This practice is called making a business plan. Surprisingly many entrepreneurs or start-up owners skip having a proper business plan which is a big red flag indeed. Do you know what can not be having a business plan lead to? Your business roaming around directionless like a headless chicken. Things, business operations, and even the thought of scaling the venture can go haywire in the absence of a business plan.

Lacking A Competent Team: 

Having a competent team with people who have the right skills is important for start-ups. However, many start-ups lack a proper team which leads to their poor performance in the market. This is sometimes the fault of the leaders who are not capable of handling the team correctly and creating an inclusive work environment. Moreover, this also indicates that there is a problem in choosing and leveraging the right people at the right place at the right time. 

Paying Zero Attention To What Customers Have To Say:

When you hear the phrase “customer is the king,” this is ideally not just a four-word sentence, but a really big business lesson that many businesses fail to understand. The final verdict of a product or service’s success is determined by the customer. But if your business fails to understand their needs, niche, and preferences then it defeats the purpose altogether. Many start-ups pay less to zero attention to their customers’ feedback and likes resulting in losing their customers forever.

Underutilizing The Power Of Social Media:

Social media is a very powerful tool to market one’s start-up without spending extensive amounts of resources in the initial stages. Many start-ups on the other hand underutilize the power of social media platforms and miss out on chances to build a strong brand presence online. Plus, social media platforms are also proven to significantly improve a budding business’s connection with its target audience.

The Most Common Legal Mistakes Start-Ups Commit:

Apart from the mistakes mentioned above start-ups also find themselves in some legal troubles within no time of their commencement. Let’s  see some of the most common legal mistakes that start-ups commit knowingly or unknowingly;

  • Not Having A Legit Co-Founders Agreement:

The first common mistake that start-ups commit is not having a legitimate co-founder agreement. Not all start-ups are run by individual entrepreneurs some of them are co-owned by multiple founders. So in situations like these having co-founders aligned on the same page without disagreements can be a tough task. This is why the co-founder agreement came into the picture, it is a legally binding agreement stating the assets and interests of individual founders priorly. 

  • Not Adhering To Permits, Licenses, And Registration Requirements:

To set up a business in any geographical area the business owners have to obtain certain licenses, NOCs, and permits. Failing to do so can land their business in legal trouble and hamper their reputation in the marketplace.

  • Not Drafting Proper Contracts:

Lastly, start-ups are usually seen as not investing time in drafting proper contracts. This is why it becomes very difficult for them to negotiate contracts, file suit against the wrongdoers, and carry out business transactions easily.

Having seen all the mistakes that the start-ups commit in their initial years of commencement that lead to their failure, let’s see some of the steps start-ups can take to correct these mistakes;

The Path To Redemption For Start-Ups: Things They Must Do:

Well, committing mistakes is an outcome of action and it is bound to happen. However not paying enough attention to correct those mistakes can be a problem. So to save you some time and effort, here are some things you must do as a budding start-up on your road to redemption from common business mistakes;

  • Timely Assessing Business Needs:

The first step is to assess your business needs timely to avoid being irrelevant in the market. This also includes regular research and development, fostering innovation, and conducting market analysis.

  • Focus On Having The Right Approach For The Team:

Most start-ups neglect the fact that having the right approach plays a vital role in their success, thus, they fail miserably. However, keeping things perfectly managed with the team can be extremely beneficial. Right approaches include transparency, acknowledgment, appreciation, and good communication.

  • Keeping An Eye On Customer Feedback:

Lastly, heightening customer satisfaction and experience should be your start-up’s ultimate goal. For that, you will have to keep a close track of your customers and their feedback. Customer feedback helps your business to observe whether or not a business is doing good in the market along with providing you with a scope for improvement.

Summary: 

Summing up there’s just a little reminder for start-ups that understand that no one is perfect. There have been earlier that have made mistakes before you and there will be start-ups that will make mistakes after you. So don’t overanalyze your mistakes, just identify, plan, and act accordingly. The key to success in the long run is to break the existing patterns that have not worked out for your business and ensure to avoid the same business mistakes in the future.

TISHA SHARMA

EX BYJU'S || EX. VKALP || EX SECURE AUTOMATION CONSULTANTS || HRBP || Human Resources

5mo

Hello I m looking for new opportunities

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