According to GEM Global report, more than 100 million businesses are launched annually. But to be precise, how many percentages of businesses launched survive through the first year? A study by Bloomberg shows that 8 out of 10 entrepreneurs fail within the first 18 months.
In fact, do you know that 30 percent of new businesses failed during their first two years of being open, 50 percent during the first five years and 66 percent during the first 10 years. Due to mistakes that can be avoided.
Meanwhile, a lot of people believe that the most effective way to learn as an entrepreneur is by making mistakes; whereas, you can learn from other people’s mistake to balance up your entrepreneurial journey. You don’t need to wait until you make mistake before you can learn.
If you are aspiring to be an entrepreneur, or you’re planning to kickstart your own business in 2018, then every piece of this article is for you. Below therefore are 5 elementary mistake all startups must avoid:
Weak business planning:
Inappropriate business planning has been one of the top reasons why startups fail. For every startup to stand out, it is important to have a good business plan and a flexible business strategy.
Some startups even think that a rigid business plan are only for shareholders, forgetting that proper business plan is the basis of a successful business – and a road map that directs all business activities to the desired destination. Which means without a proper planning there is no success.
Inpatient and overconfidence:
No doubt, lack of confidence in yourself and your product will definitely lead your business to a crisis. At the same time, overconfidence and impatience can also be a great disaster for startups.
A lot of startups usually have the belief that their own product is too perfect for the market. Hence, they forget to study the market trend and produce what people want. Fortune reported the number one reason why startups fail: “they produce an unwanted product.” A careful survey of failed startup reveal that 42 percent of them identified the “lack of market need for their product” as the top reason for their failure.
There is no short ways to it, as long as people didn’t want your product, your company is not going to succeed. But many startups still believe it is not important to produce what people want, they believe it’s more possible to convince people to get their product. And that is the reason for their failure.
Hiring the wrong people:
“For any startup, the most common important factor to drive the company to the next level is by hiring a competent employee. The moment you hire the wrong people, then your company is at stake” says Nicholas Dutko, Founder of Auto Transport Quote Services.
What attribute do you seek in an employee? No doubt, it’s better to hire someone with exceptional skills, knowledge and better experience; but it more better to hire someone with good attitude. Because skills with knowledge and experience is of no use without an enthusiasm spirit, you need someone who is ready to work with his whole hearth. You can train skills, impact knowledge but you can’t train enthusiasm.
According to a study, only 11 percent of the new hires that failed in the first 18 month failed due to the deficiency in technical skill. The majority failed due to the problem with motivation, willingness to be coached and emotional intelligence.
No wonder why big enterprises go extra miles before hiring any employee. They realize there is the need for people who can work better as a team to help the company’s growth.
Just by hiring the right set of employees, your company can be guaranteed of a secured future and protect you from unnecessary financial cost.
Neglecting customers value:
Do you know that building a good relationship with customers, can prevent a company from experiencing financial problem and downfall. Study shows that bad customer service cost US companies a whopping amount of $41 billion dollars in a year.
Good Customers service is a key element to satisfy your buyers need and can help you deliver more value for them.
As a matter of, statistics reveal that for every single customer you add positive value to, they tend to share the good news with 10 other people; referring them to your brand. Likewise, if you neglect your customer’s perception, it can serve as a downfall of your company. A 2013 study by market research firm, Harris Interactive, showed that 85% of customers whose service needs are not met will retaliate against the company.
No wonder why a lot of car shipping carriers spend so much on their customer service optimization just to make sure that all their customers are brought to satisfaction at every single point of interaction.
Inappropriate financial plan:
Cash flow is one of the important factor to consider as a startup company, If your expenses exceed your cash, then you will definitely have a cash flow problem. A lot of startups belief they can escape through with a little finance capacity.
A recent statistics by Matt Mansfield shows that 82 percent of businesses that fail do so because of cash flow problems. And almost 77 percent of startups rely on personal savings for their initial funds.
It’s important to remember that your company will only be successful if you bring in more than you spend. However, this may not happen if you startup a company with little capital and you’re struggling to balance the financial aspect; no doubt, there is a high probability of failure due to the shortage of cash to manage it in a proper way.
However, it’s advisable to kickstart your business with enough money, that’ll last you to the point where cash is flowing in and you don’t need to fear anymore.
Starting a business is not an easy task, but being aware of the pitfalls and mistakes that lies ahead, would prevent you from becoming a negative business statistics.
Author: Daniel Moayanda
Dan. is a young strategist, motivational writer and public speaker. He provides entrepreneurs with success strategies and backs it up with the right motivation needed to explore. He also writes about finding a way out of everything in general!