40 schoolboy errors start-ups make
Every new business makes mistakes. But you need to avoid as many as possible if you want to survive.
1. Assume 'everyone will want
this'. Everyone won't. Target everyone and you end up
targeting no one - a massive turn off for investors and banks and a
guaranteed way to waste money when marketing. Indentify your target
customer then get close to them. Read our section on market research for more help with
2. Can't sell, won't sell. There is
no business without sales. Consider joining forces with a partner
who's sales driven - but don't shy away from it. If you believe in
your business, prove it. Read books and our section on sales.
3. Lose focus. Resist diversifying
too early, no matter how alluring the opportunity. Instead,
establish a healthy customer base from the products you have spent
months researching and refining before branching out and diluting
your core strengths. Stick to your plan.
4. Quit your job too soon. Do as
much as you can while you're still being funded by someone else.
Don't burn any bridges and be careful not to infringe
non-competition clauses in your contract (see our guide on when to quit your job for
guidance). Avoid telling colleagues about your venture. The gossip
will invariably reach your boss.
5. Don't understand the industry.
Industry experience isn't essential, but industry knowledge is.
Keep abreast of competition and developments by reading trade mags
and websites and attending plenty of networking events. You'll get
closer to your competitors, suppliers, customers and potential
6. Don't tell everyone you can about your idea
for fear it'll get nicked. Now this is one's up for debate,
but we say: tell everyone. The more people know what you're doing,
the more useful contacts friends will refer you to. You shouldn't
fear idea-nicking. If your business is any good, other people will
7. Think a great idea alone is enough.
Plenty of genius ideas have died sorry deaths in the hands of
creators who forgot about less innovative functions such as sales,
cashflow, marketing - even a plan. A great idea without any of
these is a project, not a business.
8. Haven't accounted for late payments
in your budget. Late payments are enough to kill a business.
In fact, 40% of failed businesses attribute their demise to tardy
payment. Always chase late payers and make sure you have enough
cash to see you through for up to four months of overdue payment
from each client, if not more.
9. Not enough market research.
Fatal but sadly classic error. Don't ignore the hard numbers of
your idea in an attempt to convince yourself it's viable. Is there
definitely a market for your product? Are you sure? Prove it to
yourself before anyone else. Check out our section on market research.
10. Bad name. You need to be
findable on- and offline, and set the right tone through your name.
Check out our mindmap on choosing
a business name for advice.
11. Make pie-in-the-sky forecast
figures. A massive turn-off for investors and banks, and
potentially lethal. Make everything tangible and explainable.
Anticipate spending twice as much and making half of what you hope.
See our mindmap on how to make a sales
forecast to make sure you stay grounded.
12. Think your sales forecasts are
accurate. No sales forecasts are accurate. Don't over-rely
on what you've predicted. Create best, worst and middle-case
scenarios and always have a contingency fund should things go worse
13. Think big but don't think about
scale. Got ambitious growth plans? Great, but be clear and
realistic about how you're going to get there, and when. Think
about infrastructure and choose IT systems, suppliers and
distribution channels that can scale with you.
14. Don't register your business
trademark early enough. This is more important than
patenting as it confirms you can use your chosen name and logo.
It's vital to do this before printing out all your stationary, or
you risk having to re-do it at a cost of hundreds or thousands.
Here's our advice on trademarks.
15. Forget to think up consistent
stationary and signatures before starting. Getting everyone
to use the same email signature and consistent branding across
correspondence makes you look professional. It's quick and simple
to decide on, too.
16. Don't user-test. Test
everything. Make sure your target customers actually like the way
it looks and works, and find out how much they'd pay for it. Your
family and friends are not customers, by the way: they'll
sugar-coat. You need people you don't know. Trust us.
17. Don't set targets. Having a
vision focuses your efforts and creates structure. Your ambitions
may well change but having a starting point helps immensely. Read
to set business targets.
18. Agonise over minutiae.
Does it really matter whether you use Arial or Calibri font on your
invoices? Prioritise ruthlessly. Look at how many sales a piece of
work is likely to bring in, and allocate your time and resources