If you’re a startup CEO, you’re most likely already aware of the sobering stats about startups. About 90% of startups fail — and 10% fail within the first year. Moreover, under 50% of businesses make it to their fifth year, while just 33% of startups survive to see the 10-year mark.
Whether a startup has a weak founding team, is crowded out by the competition, or simply runs out of funding, it’s too common for startups to crash and burn. Keep your startup going strong by avoiding these key mistakes.
#1. Not Tracking Your Time.
The first trap where many startups get stuck is not optimizing productivity. Anyone using Agile processes in a startup environment should carefully track their time. This tracking is especially important for software developers but applies to anyone doing task-based work in a startup setting.
That’s the benefit of time tracking: It helps you stay aware of how long things are taking and anything holding you up. Once you’ve gained this greater understanding of your progress, you’ll improve where needed. In addition, tracking your time as things get rolling will help you nail a process that works for your startup and its team.
#2. Misreading Marketing Demand.
Many startups fail because of misreading or failing to research market demand. That’s why it’s essential to research your market thoroughly, ensuring there’s a demand for your product before you put too many resources behind introducing it to the market.
Think about your ideal customer, considering the demographic of your target consumer. You should also consider factors such as:
- Why would this target customer buy your product (what pain points does your product address?)
- What price your target customer would pay
- How you might be able to reach your target customer
- How many target customers exist in your target area
The market research also includes investigating your competitors and potentially running a beta test to test the waters on a smaller scale. Google and social media websites will be helpful as you conduct these different facets of your market research. Remember to analyze the results you find, ensuring enough demand to help your startup stay afloat.
#3. Neglecting Your Marketing.
Once your startup gets up and running, a strong marketing team will be key to keeping it that way — so this is something you need to plan for in advance.
Statistics show that 56.9% of startups have a dedicated marketing team. 15.3% rely on the owner as the sole marketer. Startup marketing can be a hassle; when your resources are limited, you may not be able to hire the best talent or afford helpful marketing automation tools. But even if you’re a one-man band, you can still educate yourself on marketing best practices to help your startup grow.
Take advantage of free resources on website design, social media marketing, and email marketing to get a crash course on all things marketing. Your marketing doesn’t have to be complex or fancy. If you know your target audience, you know your way around their favorite online platform, and you’re consistent, you’ll be able to produce results that will keep your business going.
#4. Overlooking Accounts Payable.
In 2018, 82% of businesses that went under did so because of cash flow problems. Unfortunately, poor cash flow is a startup killer more often than not — so it’s essential to circumvent this problem by systematizing your accounts payable management to keep good relationships in place with your vendors and planning for related cash flow.
The best option is an end-to-end accounts payable platform that automates invoice and bill processing. This software simplifies your processes because all information on your corporate spending and purchases is in one place. There’s no need to have separate documentation, corporate credit cards, and ACH or check payments.
Instead, you have full control and visibility over everything you need to see.
#5. Networking Too Little.
Start networking sooner rather than later. Networking helps you find new business and new partnership opportunities and makes you look more attractive to investors. You can also use networking to find mentorship and peer support or access business resources that will help you through the startup process.
Good networking ideas for entrepreneurs might include:
- Attending industry events or trade shows
- Utilizing social media groups and communities
- Getting involved in your local area with business groups and nonprofits
- Joining professional associations
Keep business cards in your pocket and networking in mind no matter where you are.
You never know when the perfect opportunity may come up. It’s often when you’re least expecting it!
#6. Hiring People You Know.
In most cases, mixing your professional life with your personal life isn’t a good idea. Think about it: You hire a friend or family member, but their work isn’t up to par. Will you fire them, potentially causing a rift in your relationship — or will you grin and bear it while they continue to produce second-rate work? Unfortunately, hiring close friends or family members often ends in disaster.
Of course, there are some exceptions to the rule. In some cases, you might already be acquainted with a professional, friendly expert looking for a new job in their field (this is another reason why networking early is so important). If one of your friends is qualified for the job, that’s great! Just be very wary of hiring someone because you know them — and stick to hiring acquaintances instead of hiring close friends, so you don’t ruin existing relationships.
#7. Ignoring the Onset of Burnout.
Startup culture isn’t a space that generally prioritizes work-life balance. But if you don’t set some boundaries now, you may find yourself exhausted and unmotivated sooner than you think.
Recognize the signs of burnout, including feelings of stress, irritability, fatigue, insomnia, physical health issues, and more. Then, have an “escape plan” in place if you need some time to take off. And, even better, put routines in place now that will ensure you never get to that crash-and-burn stage.
It’s important to have all the tactical pieces in place for your business to succeed, but it’s equally important for you to recognize the signs of burnout and do what’s necessary to keep it from setting in.
Your company can still succeed even if you take weekends off or pause during the workday to grab lunch with a partner or friend. It’s even more likely to do so: Most working Americans say they feel more energetic and less stressed after taking vacation time, with higher productivity and better quality work.
Prioritizing ongoing stress management is key.
Help Your Startup Succeed.
The startup market indeed is a cutthroat one — and as a startup CEO, you’re wearing many different hats. Unfortunately, this makes it too easy to slip into a costly mistake that could halt your momentum before your company even gets started.
By avoiding these seven common planning mistakes, your startup will have a much higher chance of success.