The Survival Stage: 8 Common Mistakes Startups Make
I find watching a great movie a great way of unwinding and switching off from my business. Last weekend I really wanted a break from the intensive strategic work I've been doing over recent months. So when I went to watch the romantic comedy, The Intern, I didn’t expect it to provide inspiration for the a series of blog posts on how to navigate the five stages of business growth and development!
So what does The Intern have to teach us about The Survival Stage: The 8 Most Common Mistakes Startups Make?
Robert De Niro’s character, Ben Whittaker, is a seventy-year-old, retired executive and widower. He‘s bored and in desperate need of something that will give him a sense of purpose. Through an internship program for senior citizens, he starts working with Anne Hathaway’s character, Jules Ostin, a young wife, mother and founder of an online start-up.
Meanwhile e-commerce fashion company, About the Fit, is growing faster than anyone, least of all Jules, expects. Just like many of us, Jules founded her company from the kitchen table. In the space of just 18 months, she’s created a 220-employee juggernaut! However Jules’ investors don’t think she's enough experience to run a company growing at this rate which knocks her confidence and has her wondering if she has what it really takes. Matters are made worse at home where Jules struggles to meet the needs of her stay-at-home husband and her young daughter.
Enter Ben Whittaker. Ben has Jules' back, and over time wins her confidence to provide the thoughtful mentoring that helps Jules to save her company.
How Does A Business Like Jules' Go From Kitchen Table Start-Up To Fast Growing Company?
Every business, however large or small, passes through five stages of business growth on its journey from pre-launch to organisational maturity. Whatever your goals, and no matter what type of business you’re striving to achieve, every small business owner has to successfully navigate the common challenges associated with the first stage of business growth - survival.
These are the 8 most common mistakes startups make during the first stage of business growth and development. Do any of these sound familiar?
1. Getting Enough Customers
The #1 priority of all start-up businesses is to get as many customers as possible. This means focusing all your time and resources on getting your sales and marketing activities right. That's why it's so important to understand the Marketing Rule of 7 x 3 which says that you have to do far more marketing than you think possible to win those first customers and get your business off the ground.
The #2 priority for any start-up is to reach break-even point as quickly as possible. And once this is achieved, to then ensure that the business has will to continue to break-even over the coming months and then start to turn a profit. Not knowing their break-even point is another surprisingly common mistake startups make.
Your pricing strategy – or lack of pricing strategy – can undermine your ability to grow your business and achieve sustainable business growth. A common problem I see a lot among start-ups, solopreneurs, and micropreneurs, under-pricing has several causes including:
- Fear of failure;
- Lack of belief in your skills and abilities;
- Missing pricing information about the pricing strategy of others in your industry;
- Miscalculating the actual costs incurred in delivering your product or service;
- Inability to articulate the value of your product or service.
The evil twin of under-pricing, under-earning is another typical problem experienced by small business owners. Low self-esteem is a major factor - if you don’t believe in yourself, it’s very difficult to charge a fair price for your product or services, and then to pay yourself accordingly. Along with self-belief, the ability to clearly articulate and define your value strongly influences your pricing strategy.
5. Inadequate Funding
Put simply, you didn’t have a big enough financial cushion when you set up your business. Whilst I personally took a far more conservative approach when I prepared to leave my corporate role to start a business, you need a contingency fund that is at least the equivalent of 12 months of operating costs in addition to the amount you need to live on during your first year in business.
6. Over Optimism
It’s all too common for business owners to set unrealistic goals and targets about what’s achievable in their first year of business. When you’re putting together your first business plan and forecasts, to a large extent, you are crystal ball gazing. This is why it’s so important to be conservative in your projections, and then to watch your key sales, marketing and financial metrics like a hawk so that you can adjust your sales and marketing activity based on what is - and isn't - working.
7. Ad Hoc Planning
Start-up business owners often get so caught up in seemingly urgent activities – to convince themselves that they’re busy – rather than allocating sufficient time to ‘working on’ their business. I recommend a system of weekly, monthly and quarterly reviews where you shut yourself away to plan your business activity. This will help you to stay on track to meet your business goals and targets.
The majority of us work long hours when we first launch our business. Our passion and enthusiasm can mean we lose all sense of time and our excitement finds us working long past the time the family has gone to bed. I'm definitely guilty of this. But before we know it, this extended workday turns into extended work weeks and, before long, what fueled our start-up passion, has turned into an unhealthy habit that’s affecting our health, our relationships and our business.
This is why I've made Tuesday evening my 'movie night.' I leave my office to go to an early evening showing. The redoubtable Maggie Smith in The Lady In The Van tomorrow.
Do any of these 8 common mistakes sound familiar?
If so, know that you’re not alone. I know I’ve made at least four of them in my own business! And I can’t think of a single business owner in my network who hasn’t made a number of these common startup mistakes too.
The good news is that if you’re a member of my community, I show you how you can overcome these – and other mistakes – whilst putting a solid foundation in place so that you can grow your business with confidence.
Questions: Which of these 8 common mistakes startups make most resonates with you? How did YOU overcome them? I'd love to get your thoughts in the comments box below.
If you enjoyed this article…
… you’ll also like 6 Business Lessons From Jewellery Brand, PANDORA. It is a lengthy article, so you’ll want to make a cuppa before you start reading it. BUT it’s the inspiring story of how a Copenhagen based goldsmith went from one small shop to a global brand with more than 10,300 retail outlets in 90 countries and a powerful e-commerce site.
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