Starting a business is exciting — after all, you're finally living the dream of being your own boss. But since many startups never make it past the fledgling stage, making the right moves at this critical time is vitally important. Here are five startup mistakes to avoid.
Mistake No. 1: Not having a business plan. You may not need a 200-page printed business plan, but you do need some type of roadmap for how you plan to finance, market and launch your business. A business plan is essential if you hope to get a business loan or attract investors to your startup. But even if you aren't seeking financing, a business plan will help you to think through all the steps involved in startup and to stay on track once you launch. Check out Bplans for sample business plans and templates you can use to create your own plan.
Mistake No. 2: Not having a website. Putting up a business website is today's equivalent of hanging out your shingle: It’s how you tell prospective customers you exist. Fortunately, it's easy and affordable to start a business website, whether you plan to sell products online or simply want to use your site as a marketing tool. Make this one of your first steps, because your website will become the foundation of all your other marketing efforts.
Mistake No. 3: Not understanding your market. Too many startups fail because the owners try to sell something they want to buy — instead of selling something that customers want to buy. Before you launch your business, do extensive market research to make sure there are enough potential customers out there to support your product or service. Get feedback from your target market, and if they suggest changes to your product or service, listen!
Mistake No. 4: Not having enough capital. Being undercapitalized is one of the top reasons why new businesses fail. Writing a business plan will help you determine exactly how much money you need to get your business up and running. Getting financing for a startup is difficult, so your best bet is to keep costs low and put the profits back into your business. Having 12 to 18 months worth of capital on hand is a good idea — that's how long it typically takes a new business to become profitable. Don't forget to account for your own living expenses as part of your costs.
Mistake No. 5: Not investing in marketing. Startup entrepreneurs often see marketing as an expense, rather than what it really is: an investment in your business. Without marketing, no one will know your business exists, and you won’t attract any customers. The good news: Today, online marketing is the primary means of spreading the word — and it's extremely affordable for even the smallest startup. Enlisting a company that can assist you with online marketing efforts, including search engine optimization and pay-per-click advertising, can help you get better results.