make it on the better side of the statistic.
Getting the financials wrong – New entrepreneurs very commonly underestimate the capital it would take them to reach the break-even point, and that can sound the death knell for a growing business. If the credit goes out of control, you may have to unwittingly hand over the keys to your creditors.
Pushing the margin of error – The recent economic downturn displayed how even big league companies can go crashing down in the face of the cyclic nature of the market and external forces. The margin of error for smaller companies is smaller still. It’s better to perfect processes than scaling up in a haphazard fashion.
Bad execution – Having a great idea, however pertinent, can never match tight execution as a factor for start-up success. Two things that help are playing on your strengths and surrounding yourself with talented people who are not afraid to speak their mind. It’s also tantamount to stick to your laid out business plan and write accurate financial projections.
Not enough demand – This is especially risky for a product or service that is radically innovative. The idea is brilliant in your mind, sure. But it may fail to take off for your potential customers and that leaves you with an unviable market. Therefore, you would be doing yourself a big favor if your talk to customers about what they need and conduct thorough market viability studies before launching the business
Focusing excessively on competition – One of the biggest rookie mistake that an entrepreneur can make is try to fight top companies in their market segment right from the word go. Bigger, established companies can use a multitude of strategies to nip your venture in the bud if they feel threatened. This may include undercutting your prices, overspending you on marketing and advertising, besides other things. It’s a better idea to stay in your trenches and work on a niche quietly, until you have passed the initial growth phase.
Not finding your unique selling proposition – If you wish for your venture to be successful and sustain it over a longer period of time, you will have to differentiate it from the other bevy of companies that are essentially doing the same thing as you are. You cannot afford to be just another me-too organization. Your USP could be a great location, an innovative cost structure, superlative customer service, cutting edge technology and many other these things and their combinations.
Non-committed founding team – On occasions, it may happen that after the initial enthusiasm passes by and the harsh realities start hitting the management team of a start-up, one or more founding members may become disgruntled with the venture and may want to leave. And because one person plays a lot of roles in a typical start-up, replacing them may be an activity in vain. To this end, it is pertinent to make sure that agreements are structured in a way to keep founders and key hires interested in the venture.
Scaling up too fast – Growth is often considered one of the primary signs of success, but that’s where most people are wrong. There are numerous small companies that do remarkably well and don’t intend to scale up. In the end, it is the motivation that drives the founders as to how big or small there company should be. But scaling up recklessly can change the dynamics of the business and things may spin out of control.