Setting up a new business means a lot of responsibilities and one has to manage broad issues such as company formation, finance, market research, prototyping and so on. The list is so exhaustive that it is obvious to make mistakes.
Many inexperienced and young entrepreneurs make mistakes when it comes to their first venture. Let’s take a look on a few of the examples of common mistakes that these young entrepreneurs commit with their remedies.
Keeping the idea secret: It is a misconception that the startup ideas are everything and they should be kept as a top secret. If you share it with someone, then your business plan would be hacked and someone else would implement it. In real life, the idea has very little to do with success and growth in startups. PayPal started as a security company, Sony started with rice cookers and so on. So don’t worry about sharing your idea with someone because the real art lies in the execution of the plan.
Ignore the cash flows: Most of the startups fail because they run out of cash in a short span of time. The first time entrepreneurs simply fail to realize that each and every day spent in the business costs money and they have to maintain enough cash reserves to bear the running expenses like rents, salaries and other costs. Many entrepreneurs burn the cash at a faster rate than they earn the revenue. No business can generate cash from the day 1 and therefore one should take utmost care to keep enough cash reserves so that the business keep going.
Cater to the mainstream market in the initial stage itself: The biggest issue with the first generation entrepreneurs is that each and everyone wants to become the next Facebook and Apple and their products cater to the same market I.e. mainstream public. The real problem with the startups targeting the mainstream market is that the different people have different tastes. If you go through the history of Facebook, you would get to know that it started with Harvard, then other universities and after that it became popular among the youngsters and the mainstream market. Startups should target a specific area or customers at first and then gradually grow towards the mainstream as this would help them to know the needs of their customers.
Get diverted toward multiple ideas and products: Once you put your hands in any business, then you get to know about different customer needs and in many cases, the customer demands are too tempting and it seems that you can earn money with different opportunities. This is the biggest blunder what the first time founders make and very often and they shift their focus to the multiple products. Let’s take the example of Apple; when Steve Jobs returned to Apple, the company was selling a number of products and none of them was successful. Steve killed all these products and focused on 1 Notebook and one personal computer and these products are rock solid till today. The moral of the story is to focus on one product at first, and make it insanely great. You need to learn this art from famous entrepreneurs.
Quitting too early or run away from the reality: Many young entrepreneurs are scared of failure and they waste a lot of time doing useless activities like getting business cards, designing the company logo and other things. Sooner or later, they realize that things are no more working and then they decide to quit, but by that time they had already spent a good deal of time and money. On the contrary,there is a league of people who are early quitters and are not able to survive in pressure. Both the cases cost heavily, but each time you fail, you learn a lesson and a true fighter would always come up with a better product. One should always analyze what went wrong and should strike back with double power.
Collaborating with the wrong Co-founders: Partnerships issues like difference of opinions, different risk appetites, low knowledge base and many other issues are the obstacles in the way of a new business. Everyone has a different risk aversion and capabilities and they act accordingly. While one cofounder may be ready to work 14 hours a day, the other may not find suitable to do the same. The problem with the first time founders is that not all of them are able to deliver what they talked and dreamt about. When things become serious, some get paralyzed and while others simply quit to find a better and safe option. The market is full of such issues when a 50/50 business got started and within just 6 months, one of the partners parted their ways. The solution lies in a ‘cofounder agreement’ that could be made at the inception of the business itself that provides flexibility so that both the friendship and the business go hand in hand and none of the two gets affected.