Starting a business is a decision that comes with a huge chance of success and an equally large, if not larger, chance for failure. While there are many articles out there that will tell you what decisions you should be making to put your business in the position to make the largest splash when it opens and drive profits, there are not many articles out there that will identify some of the biggest pitfalls that you can encounter when opening a business. Some of the decisions that you make when opening your business can set you up for failure before you even get out of the gate, and unfortunately, many of those decisions do not scream that they are the wrong decision to make at the time; in fact, some of them might be some of the most logical options open to you. The following list details five decisions that you need to avoid to put your startup in a position of success--if you heed the list well, you will definitely be in the best possible position to launch your new business to new heights and avoid any unnecessary stress that comes along with opening a business.
Raising Too Much Money
This seems counterintuitive--after all, don't you want the most amount of money possible to ensure that your business will always be able to take care of operating costs and grow? Well, the answer to this is yes, but when you raise too much money too fast, then you have the added trappings that go with it. You cannot just hoard that money in the bank for a rainy day; investors will start collecting on the money that they have lent you if they see that you are not using it. When you have to use it, you have to put more effort into your business to keep it running closest to your vision, and eventually, it all tends to just compound. Having too much money when a business opens can mean that you lose sight of your vision and your discipline and fail, so you should remember to keep your business to a manageable size at first.
It may seem like the later your launch is, the better, but this definitely is not always true. Procrastination almost always leads to a worse product than one that could have been completed if you had taken the time to complete it in manageable chunks. In addition to this, even though you may think that the extra time that you have to put more work into your business will be good for it as well, but in fact, the extra time can lead you to overthink and therefore overcomplicate aspects of your business that would have otherwise worked much better. Lastly, a late launch can deter future investors and miss a crucial stage in the market that you are working in.
Doing It By Yourself
As much as you might hate to admit it, if you are going to start a business, you are going to need co-founders. There is simply too much work to be done by one person, and even though you might think that only having one founder for your business will keep the vision for the company more pure or focused, it will usually get lost in the process of trying to juggle everything that you have to take care of. Lastly, having no cofounders shows investors that you were not able to get anybody else to sign on to your business idea, which does not bode well for your chances at collecting capital to launch with.
Not Managing Your Investors Correctly
It may be tempting to outright ignore advice that investors give you and even more tempting to cave to the ideas they pitch to keep them happy and keep their money flowing, but most of the time, investors do not know much about running a business, and they focus more in the economic side of things. What they think will work for your business might just work sometimes, but you should really take the time to analyze ideas given to you by investors.
Having A Derivative Idea
There are a million copycat companies on the market, and while you might think it would be a good decision to limit your risk by basing your business model or your product off of a preexisting and successful business's, derivative ideas are the death of profits, since people will already have an option they trust and enjoy at their disposal. Instead, find new problems and think of ways to solve them--you will see the return much more than you would trying to improve upon a preexisting and successful solution.
There are a number of pitfalls that could sidetrack your early-stage startup, but few are as detrimental to both the initial and long-term success of your business as the five listed above. If you want your business to make it, you need to avoid making these mistakes at all cost, otherwise it could spell certain doom for your company.