As founder and CEO of Entrepreneurial Spark I have worked with over 660 entrepreneurs across the UK. I know the rollercoaster ride entrepreneurs face when first starting out, I know how tough it is to get started and how easily you can become dejected and lose focus. Sadly, there is no fool proof guide to creating a successful business – it takes hard work, dedication and a serious commitment and belief in your business. As the old saying goes though, you have to be in it to win it!
You will make mistakes throughout your business journey - it’s inevitable that somewhere along the way you’ll say ‘yes’ to something you should have said ‘no’ to, focus on an idea that doesn’t have legs or try to run before you can walk. While you can never prepare for every eventuality, I wanted to share the top 10 mistakes startups make during the first 12 months and. more importantly, how you can avoid them!
1. Not actually talking to potential customers!
I can’t explain how many times I’ve spoken to entrepreneurs who swear they’ve talked to potential customers about their business, only to have it transpire that in actual fact they’ve merely spoken to a handful of people.
Why would you go through the effort, stress and workload of starting your own business if you don’t know that there are customers out there willing to pay for your product or service? It’s daft!
You need to know the structure of your business and be able to show this to investors and be confident that it encapsulates every vital piece of information they’ll be looking for.
Before you even think about speaking to investors or spending money on employees or assets, make sure you speak to people. Go out into the city and stop people on the street to ask them about your business, hold focus groups, talk to people on social media, grasp every opportunity available so you can prove to yourself and future investors that the demand is out there.
2. Having little structure to your business
When you start a business you need to properly and thoroughly define the responsibilities of the directors, the kind of business which will be undertaken and the means by which your shareholders will exercise control over the board of directors to establish your company.
No one will pay any attention to you if you can only give them a wishy washy idea with no substance behind it. You need to know the structure of your business and be able to show this to investors and be confident that it encapsulates every vital piece of information they’ll be looking for, otherwise you’ll be seen as a risk and never get investment.
3. Hatching a business over a glass of wine and go 50:50 without thinking about the consequences
After a few glasses of alcohol you might think you and your pal have the best business idea ever and already be spending the millions you’ll make in your head. But in the cold light of day you need to ask yourself is it really a good business idea? And, if it is, is the person you enjoy having a glass of wine with really the ideal business partner?
We all have friends we got on well with, but would never want to work alongside, so make sure you really think it through before setting up a business with someone. Especially if you’re going to go 50:50. There’s always going to be a leader, there has to be, so really think through how your friendship dynamic will affect your business before signing anything.
4. Over-egging what the sales will be in year one
Creating a successful business takes time. Some entrepreneurs, like me, are optimistic, which is great when faced with difficult situations. But, in order to be a successful entrepreneur you need to be realistic. There’s no point in over-estimating what your sales figures will be in the first year because you’re just setting yourself up to fail, and you’ll then have to explain to stakeholders and potential investors why you under delivered. Set yourself goals and aim high, but keep it real. There’s time yet to reach for the stars!
5. Thinking it’s easy to bring in investment
The harsh truth of being an entrepreneur is that you aren’t guaranteed to get investment. Not everyone who starts their own business will be able to successfully court an investor and as those who have done it will know it’s no easy or quick, task. It takes time to get investment – you need to think about what you want, what your business needs, how you will use the investment, how you will convince investors your business is the right one for them to spend time and money on, and you need to forecast what this money will mean for your business.
Yes, you might get lucky and have a chance meeting with someone who decides to invest in your startup. But realistically it’s a hard slog and you might need to speak to several people before you find the right one for your business.
6. Thinking that you can do it all yourself
Look at me – I’m a super entrepreneur! I started my business all on my own and am going to develop and scale it on my own, too. Wrong! You can’t do everything yourself.
If nothing else, no one person is incredibly skilled at every single aspect of business. You might be great at the marketing and speaking to potential investors and customers, but do you know enough about forecasts and banking, and the legal checklist you need to tick along your entrepreneurial journey? My bet is you don’t.
Set yourself goals and aim high, but keep it real. There’s time yet to reach for the stars!
That’s why you need to hire smart. Look for people who fill the gaps in your skillset and build a dedicated, hard-working team who have bought in to your vision. You’ll see much more success this way than trying to be super entrepreneur all on your own – and it’s less lonely too.
7. Getting fooled by consultants who charge a small fortune for useless stuff
A lot of first time entrepreneurs are approached by consultants across various fields who offer their services in return for a fee and an often hefty one at that. While it might seem like a great idea when they’re giving you their marketing spiel, make sure you take some time out before agreeing to anything. It’s easy to get caught up in the moment and say yes to things you don’t need for far too much money, but don’t let yourself fall in to the trap and take some quiet time on your own to review things before you decide anything.
8. Neglecting networking
You’ll never get anywhere if you don’t get yourself out there and meet people. I can’t stress enough the importance of building a relevant network. Whatever you do and wherever you go you should always be speaking to people, whether it’s online or offline – you never know who you could meet by making the first move and saying hi!
9. Spending time with a laptop rather than human beings
If you’re searching online to see if your business is viable then you’ll likely always be able to find some piece of research which says it is. But no investor is ever going to give you money based on some research project done in the west end of nowhere back in 1999. As I said earlier – get out there and speak to people! Have a human conversation and ask people what they think about your business. Find out if there’s a market for your product or service and ask questions to determine what shape this product or service should take. You’ll get far more value out of a day spent speaking to people than you would a day stuck behind a computer.
10. Overthinking your business plan
Yes, your business plan is important and it is vital that you get it right. But don’t overthink it or you’ll just complicate things. Your business plan isn’t something you write when first starting out that then remains static, you’ll have to revisit it time and time again and make some changes depending on the focus of your business.
Your market isn’t stagnant; so your business shouldn’t be either. You have to move with the times and be flexible to change, so there’s no point in spending weeks stressing over making your business plan perfect, just make sure it reflects the key points of your business as it is now and is easy to understand.
No one is perfect and no one is able to simply wake up one day with a successful business – you have to ride out the highs and lows along the way. But, if you can avoid these 10 mistakes, or remedy them and make sure you don’t repeat them it will go a long way to helping your business!
If you’ve made any of these mistakes during your start-up journey, tweet me and let me know how you overcame them by tweeting @GoDo_Today or commenting below.