If you are thinking about launching a start-up, you’re probably already aware that the initial stages are almost certainly the riskiest. There’s no other time when you’re more likely to be derailed, mainly thanks to the lack of foundations that have been built, however many startups do get through this precarious point in their existence. The reason for their success is simple: they don’t fall into any of the common pitfalls that other start-ups stumble in to.
Of course, there are many ways that a startup can be derailed, and you can’t possibly account for all of them. Five of the big ones are mentioned below though, so make sure you pay attention to them during the opening weeks, months and years of your new business venture.
1. Bad Credit Rating
When your company first starts up, it will likely have no credit history at all. Therefore, you need to do as much as possible to build this credit up. Bizarrely though, some companies do the opposite – they borrow and dodge repayments, thinking that the little bit of extra cash is going to benefit them in the long term. It isn’t.
The reason for this is simple: if you start building a bad credit score, you aren’t going to be able to get those loans or other forms of credit you need, and this could spell disaster. Just imagine: you need to raise $10,000 to advance your business to the next level, but you can’t, because the credit agencies say you aren’t a worthwhile risk.
If you already do have a bad credit rating, correcting it should be treated as a priority. In this situation, you should call on a business credit professional to help you.
2. Not Having A Unique Selling Point
Every business, from Microsoft through to the newest start-up, needs to have their own Unique Selling Point (USP). Without it, they simply won’t get noticed through the crowd, instead always remaining in the shadows of their larger competitors. Your USP could be the new type of service you provide, the price you offer it for, or even the unique way in which you market yourself. The point is this: you have to have something to mark you out from the rest.
A USP isn’t something that should be developed over time though – it should be the main focus of your business from day one. It will be your biggest strength, so play to that strength during your formative years. Once you have built up a strong reputation, you’ll then be able to step away from that USP and diversify into other areas.
3. Neglecting Your Image
A company’s image is more important than ever, as it now has to be fantastic not only on the streets, but online as well. One mistake new companies often make is neglecting one or the other – thinking that they only need to think about their store, for example, or that they simply need to get a great website up and running.
The problem is this: both your store and your website are the public faces of your company. What consumer is going to buy from you when you don’t even take care of them? It’s well-worth getting your public persona perfect from the outset, instead of limping by and hoping that everyone doesn’t notice how unprofessional you look. Remember: trying to rebuild an image is far harder than building one in the first place.
4. Going It Alone
Some startups do succeed when only one person is involved, but it is very rare. The reason for this is simple: there just aren’t enough hours in the day to complete all the jobs that need doing. Therefore, it’s usually necessary to spread the load, and assign different aspects of the business to different people. Surely splitting the business with someone is better than seeing it fail completely, isn’t it?
Hiring staff is another option, however this is an area you need to be careful with. Unlike a co-founder, staff members expect to be paid regardless of your circumstances, so you need to think carefully before taking on this burden. Of course, they could be the best staff member in the world, and make you loads of money – but they could also end up costing you more than they’re worth.
This might seem like a strange one to include, but apathy possibly derails more businesses than the other four points combined. So many people found a start-up, get it up and running, and then simply lose interest after a while. This is usually down to the fact that they have no passion at all for the niche they are working in.
How can this be prevented though? The answer is simple: never get involved in a start-up that you aren’t interested in. If you don’t like gaming, don’t get involved in making the next indie hit for the PS4. If fashion isn’t your thing, why bother becoming involved in a website dedicated to it? If you only start something you are interested in, you should never become bored of it.
There are many other reasons why start-ups fail as well, and it is impossible to mention them all here. The fear of failure shouldn’t put you off your start-up venture though, as if you’re sensible and have passion, you’ve already got a head start over the competition.