3 Startup Mistakes to Avoid When Launching Your Business
The entrepreneurial spirit in America is alive and well, with many professionals opting to launch startups in recent years. With job openings declining and the economy struggling, entrepreneurship proved to be a useful way for professionals to stay employed during the recession. Although a solid economic recovery over the last year has brought about a return to traditional employment, many people have taken notice of how successful recession-period entrepreneurs have been. Even in the face of economic uncertainty, startup owners found success, which has made many professionals seriously consider the entrepreneurial path.
Although there are some major benefits to launching a startup, business leaders need to understand that just because some enterprises were successful during the recession does not mean that establishing a company is an easy task. Rather, it's one of the most challenging endeavors any person can undertake. The survival rate for startups is low and small businesses often are not able to turn a profit for several years.
Even so, launching a startup is one of the most liberating things a forward-thinking professional can do. It can give owners more control over their futures and allow them to pursue work in a field they truly enjoy. However, it's important for entrepreneurs to avoid some common startup mistakes that can lead to failure.
1. Pick Partners Wisely
Some small business leaders decide to partner with another person when launching their firms. For many, it's a simple way to work closely with someone they trust who is willing to offer useful suggestions for running the company.
While this can be beneficial, picking the wrong partner can be a major barrier to success, according to Joshua Steimle, a startup owner and writer for Entrepreneur. He indicated that he learned this lesson the hard way early in his career when he brought in a partner after knowing him for just 10 minutes.
Because he failed to properly interview and analyze whether that partner would be a good fit, Steimle eventually had to part ways with the individual, doing little to help the business succeed.
Just a few years ago, Steimle decided he needed a partner for a new venture and applied the lessons he learned by conducting a year-long search and review period to find the perfect partner. As a result, his company saw monthly revenues double after just four months.
2. Understand Real Costs
It's important for small business leaders to account for all expenses related to operating a company. Often, startup owners will fail to include lesser-known costs in their budgets, which can have a negative impact on the bottom line. More important, it can create serious cash flow problems that may threaten a business's existence.
From office furniture to fees for establishing a business, there are certain costs that small businesses simply overlook. The source noted that experts with the Small Business Administration suggest that owners keep a log of one-time and continuing expenses. Also, it's a good idea to consult with other small business leaders to discuss their startup payments.
3. Don't Expect Too Much Too Soon
When launching a startup, owners need to realize that they may not see profits for several years. While+ sales may be solid, the sheer volume and scale of startup costs means that entrepreneurs need to be ready for some lean years during the early stages of any enterprise's lifespan.
While there are serious financial considerations to take into account during these first few years, entrepreneurs need to also mentally prepare themselves for this period. Some business leaders second guess their decision to launch when times are difficult early on. However, by staying productive and creating a detailed business place, entrepreneurs can stay focused on growing their business, even when revenue streams are modest.