Avoid Becoming a Statistic – 5 Startup Hazards to Avoid
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?