This is the age of new business ideas, startups and more startups. It has never been easier than now if you have a great idea for a startup. However, it makes sense to run a quick check and figure out if you are committing oft repeated mistakes that have landed startups in trouble. History does repeat. So, you can do your best to be proactive and eliminate the risk of these mistakes.
1. Market size estimation mistakes
Everyone wants to conquer all market space available, create more market space, and be a leader across platforms and what not. But do diligent market research and zero in on what kind of audience you want to reach out to.
2. Time management issues
Yes, as an entrepreneur, you will have to divide your time between product development, research, delegation, marketing, fund raising and much more. Several startup entrepreneurs are severely over worked, under staffed, sleep starved and time deficient. Manage time as well as you can.
3. Market structure mistakes
Revisit economics class 101. It is tough to break into a market that a few, well established players. Study existing controllers of the market, their individual share of the market and also factor new entrants like you. A misstep here can cost you.
4. Failure to factor supply chain disturbances
A governmental decision in a remote place that happens to deal with your supply chain can cause disruptions in your venture. So, having a very proactive strategy helps with this issue.
5. Failure to understand individual units of the value chain
Impact analysis is very important in a startup venture. In a competitive market, understand how other players would respond to your strategic moves. Most important aspect here is businesses cannot continually lower costs beyond a limit. Moreover, there cannot be ground-breaking new technology, developments and features in the product every single week. Each player has his strategy to stay in the market.
6. Failure to study hidden costs
No business has ever stuck to its cost estimate plans. There are hidden costs here, there, anywhere and everywhere. So, budgeting has to have space for these unplanned expenses.
7. Inflation related cost issues
So, you made your business plans in 2013, approached a VC and got funding in 2015. Presto, the inevitable phenomenon of inflation has created a surge of costs in several factors. That throws your plans haywire. So, always, always, always factor inflation.
8. The competition conundrum
The most important takeaway from the epic film Godfather is what Sr. Don Corleone says to his son: Keep your friends close. Keep your enemies closer. While you needn’t see competition as enemy and can call them peers, the saying holds true. It is unlikely that one enters a business sector with no competition. Promote how different your product is, how cost effective yours is against that of other competitors’.
9. Negligence of past statistics
History is very important. How many entrants has the sector had in the recent years? How many made it? Why did others fail? Learn from their mistakes.
10. Hesitation to delegate tasks
Are you one of those control freaks who would don the caps in every single role in the venture? Bid goodbye to sleep, efficiency and sunny disposition. You will end up messing up with roles you are not comfortable with. Hire people, delegate tasks and trust the experts..