Avoid Becoming a Statistic – 5 Startup Hazards to Avoid
Posted on 03. Aug, 2010 by Adam in Entrepreneurship
Statistics about startup failures are widely known by entrepreneurs as well as those thinking about starting their own businesses. The SBA says that only 44% of new business startups can expect to still be doing business just four years after inception. Even if businesses that were closed by choice, or due to retirement, the owner moving on to something else, or another planned exit strategy are ignored, and if we ignore non-traditional “business opportunity” type businesses, where commitment levels are infamously low, the statistic is still discouraging. To those not sturdy of heart, numbers like these could be more than enough reason to want to throw in the towel before even beginning down the entrepreneurial path. But don’t give up just yet. While there are certainly no guarantees of success, planning for likely difficulties can considerably lessen your chances of becoming part of the bleak stats.
5 Common Startup Hazards
Be aware of these ten common pitfalls and keys to overcome them:
1. Family Ties. Starting a business is going to affect your family. Whether you’re shifting around the family finances to cover startup costs, taking time away from home to tend the store, or converting an extra bedroom into your office, your family will likely need to make some adjustments to accommodate your new venture. Success key: Get them involved. Even if your new business isn’t the type where the kids can help in daily operations, just keeping everyone in the loop will go a long way toward mutual support. From the beginning, let your family know what you’re doing and what sacrifices you’ll be asking of them. Listen to their concerns, and even their advice. Remember, they aren’t likely to be as excited about your new venture as you are, so they might just add some needed impartiality. Talk about the changes you’re making, and avoid family matters deflating your ambitions.
2. Isolation. By nature, entrepreneurs tend to be independent people. We love the idea of being “self-made.” Be careful not to isolate yourself though. Particularly in the beginning stages of business, we can easily get caught up in all that needs to be done and forget the importance of staying connected. Success Key: Network, network, network. The old saying is true: what you know isn’t as important as who you know. Don’t try to go it alone. In between your other activities, make time to network within your community of business people. You’ll find valuable contacts to help you with everything from advice on your marketing and website, to the best ways to find suppliers and clients. And once your business is going strong, don’t give up networking. You’ll benefit from learning new marketing strategies, staying current on business trends, and building lasting relationships that can be priceless as you grow. To find local groups that meet regularly, check out Meetup.com.
3. Overload. Any entrepreneur has a lot on his/her plate no matter what. But one thing that will take the wind out of your sails and kill your startup before it ever really gets off the ground is becoming overwhelmed with all you have to do and not having a plan to deal with it. Even if you’ve gone through all the proper planning and you’ve thought your business through backwards and forwards, it’s unlikely you thought of everything. So although it looks like you can handle everything on paper as a one-person show, it doesn’t take many unexpected fires before you can start to feel like you’re in over your head. Success Key: Delegate the stuff you hate. For all of us there are tasks we’d rather give to someone else. They’re the ones that are boring, tedious, or take you longer than anything else, because they just aren’t what motivates you. Another way to look at it is to identify those tasks that are not directly contributing to building your business. For example, accounting is absolutely necessary, but if accounting isn’t your business, someone else should be doing it. If employees aren’t in the cards, consider a virtual assistant for those tasks that are distracting you from your core responsibilities. Whatever you do, don’t let overload kill your business.
4. Productivity Drainers. It’s 2 o’clock on a warm, sunny day, and your friend calls you up to invite you to have a couple of beers on the patio at your favorite restaurant. You remember point number 2 above, and think, “Well, I don’t want to isolate myself, and hey, I’m my own boss, so why not!” Hold on a minute. There will be a time, if you do what it takes to make your business successful, when you can take it easy and goof off for the afternoon. While you’re in startup mode is not that time. Success Key: Create and stick to a schedule. Especially when you’re first starting out in a new venture, making the best use of your time is critical. Don’t let diversions pull you away from what’s important to you. Also, you’ll want to be sure to organize your work area, use prioritized to-do lists, and implement a scheduling system to keep track of appointments and contacts. Even if it’s just Outlook or the calendar in your Blackberry, putting your to-dos and appointments in something other than your head frees your mind to focus on your business and keeping headed in the right direction.
5. Money Issues. Just as starting a business is going to affect your family; it’s also going to affect your finances. Hopefully, it’s a positive effect, but not usually for a while. If you’re expecting to make a killing right off the bat, you have to know that’s not typical. That’s not to say it can’t happen, but it would be foolish to count on it. And nothing will kill your business and your enthusiasm for it faster than the worry and strife that comes with running out of money. Success Key: Expect the best, and prepare for the worst. Speaking of statistics… The number one reason startups fail is lack of capitalization. The key is to balance your optimism about the success of your business with the reality that there are likely to be ups and downs. Even in best case scenarios, business is cyclical, so simply plan for those cycles. Make sure that you have enough reserve to get you through the lean times, and don’t spend like a drunken sailor during the good times. Plan ahead, save, and spend wisely, and you’ll get to party like it’s 1999 soon enough!
Share your startup story, in the comments below. What are or were your biggest obstacles? What have you done to get past them and avoid the statisticians?
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18 Responses to “Avoid Becoming a Statistic – 5 Startup Hazards to Avoid”
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Corinne
03. Aug, 2010
Good points Adam. You’re right- one of the great things about an entrepreneur is that you CAN be independent, but with all that independence there definitely comes a lot of responsibility! It’s important to relax your brain sometimes from all the hard work that goes into your startup but it’s all about finding that perfect balance.
JohnAtBlogtrepreneur
03. Aug, 2010
@Corinne: You bring up a good point. It’s all about balance. You don’t want to sacrifice productivity, but it’s also important to take time out away from working on your business. ‘Burnout’ could definitely be added to the list as a Startup Hazard.
Laptop Briefcases
03. Aug, 2010
When I tried to turn my side business into a full time job I ran into all of these problems. It can be tough to manage all of these issues, especially if you are not experienced. I wish I had read an article like this and prepared myself accordingly. All it takes is a little early success to get overconfident and let things slip.
Growing Sales Revenue
03. Aug, 2010
All the points that you made here are superb. It can be tough to manage all of these issues, especially if you are not experienced. I wish I had read an article like this and prepared myself accordingly. This is a really excellent read for me. Must admit that you are one of the best bloggers I ever saw. Thanks for posting this useful article.
Credit Girl
03. Aug, 2010
My family and I are planning on starting our family business and the drive of everyone in the family really helps. Because we’ve established that it’s going to be a family business, the contribution that everyone’s put in so far is immense. People are offering their opinions and helping to execute the plans. It just works out perfectly. Hopefully it can stay this way.
Computer Tips Tricks
03. Aug, 2010
I’m actually very glad that my family does involve in my blogging job. My dad is actually writing for a fishing blog! That’s how family ties comes in. =)
sell things on ebay
04. Aug, 2010
Nice post. I know that not yet having a family to support was a big factor in deciding to quit my job and start my own business – I admire people who do have all those commitments and still decide to do it. The other big hazard to avoid, I thing, is information overload. You are so desperate to get as much information as possible to try and be successful, as quickly as possible, that it can be self-defeating. As soon as I stopped buying/reading/subscribing to everything that came into my inbox, and focused on what I knew I should be doing, things started to go well.
M
Blender
04. Aug, 2010
This rings very true with me – I am currently trying to juggle spending enough time on my online business to make it worth doing and spending enough time with my family so that they don’t feel totally neglected. Its not easy but I keep telling myself that it will be worth it in the end.
Carlton
05. Aug, 2010
I agree that if there is much overload in the beginning, you have to follow a proper plan and prioritize things. Otherwise you will mess up everything and will have no clue about anything.
Laptop Briefcases
05. Aug, 2010
@Blender: yes it is totally worth it in the end if you can successfully manage both running a business and finding enough time for family. With any luck you can build up your business enough to eventually have more free time. The trick is figuring out just how much time is fair to give to both your business and your family.
cleaning services
05. Aug, 2010
i ran into pretty much all of these issues when starting my own business. One of the key things that helped me was learning about outsourcing and really getting good at it. From there pretty much most of my issues were resolved. Good list – cheers.
car battery
06. Aug, 2010
Very good points. I think the hardest part is the financial uncertainty that you face initially, especially if your family is dependent on you. But the best one can do is work hard and let things play out after that.
PS3
07. Aug, 2010
Interesting article. i recently started up a company and the whole keeping your family in the loop works well, they take an interest, offer suggestions and feel as part of the company.
Finding time for business and family is hard to balance out but if done correctly it is rewarding!
Laptop Briefcases
09. Aug, 2010
@car battery: yes the financial uncertainty definitely would be tough if you have a family to support. When people are relying on you, you need to know where your next paycheck is coming from. In cases like that you just have to avoid big risks and be sure you concentrate on the more reliable income sources.
Bidet
16. Aug, 2010
These are main concerns that everyone must face when you start your own business but if you can overcome the beginning troubles, you will have started your own business and can continue working on it.
Growing Sales Revenue
16. Aug, 2010
Fully agree with your points here. All the posts are fully informative and having very good themes. I love to visit your blog again and again its really increase my knowledge. Thanks for the awesome post.
Robert Jordan
31. Aug, 2010
Great point about making a schedule and sticking to it. Part of being successful is having the drive and motivation to get things done.
Kevin Latmore
01. Sep, 2010
Yes this is a great article and very important for those making the jump from traditional work to owning a business. People usually seem to caught up in the Isolation phase that you referenced.
I consult people all the time and am amazed how they are so focused on the wrong things. Spends months trying to trademark and patent things that are merely basic or primitive generic concepts. They are so scared that someone will steal their idea they say nothing to no one and the business goes nowhere.