The common pitfalls that new start-up companies face
A lot of people dream of starting their own businesses and have visions of how it will rise spectacularly to the top of the pile.
Unfortunately, this dream is not an easy objective to achieve and many can ultimately stumble in their pursuit of it.
While a great deal of forecasting and planning are essential, the concepts are of virtually no use at all if there isn’t a product to back them up.
Not having the right product
Products need to be appealing, and need to be comprised of more than an idea that was dreamt up in the pub on a Friday night.
The service or product that the company offers will need to fill a gap in the market, while if it doesn’t, it can’t infringe on any existing patents or copyrights.
It’s all too easy for someone with an idea to think they’ve rediscovered the wheel, but in truth, very few of these ideas are ever viable business opportunities.
The best way of looking at things is for a budding entrepreneur to put themselves in the shoes of the customer, and to gain feedback from those who might be interested in it.
Customers know what they want, so finding a solution to a problem is often a good starting point.
Me, myself and I
Often, those with the ideas want to do everything themselves, and cannot bear to let others get involved as well.
However, this can prove troublesome as the business could end up in a position whereby there are not enough hands to carry out all of the work.
Building a team involves filling in any potential skills gaps that might exist and ensuring that the right staff are in place to deal with any eventuality.
This means that should the company find itself in difficulty for whatever reason, the staff can deal with the threat of liquidation or company administration accordingly.
Know the limits of the business
Every business, regardless of its size, will have limits on what exactly it can achieve, so hanging back from agreeing to everything in the early days is essential.
While a lot of potential customers and suppliers might walk through the door, if it isn’t feasible to complete all the work which is requested then it can be a sensible option to decline part of it.
Time is a precious commodity – especially in the early days – so making the most of it is an essential aspect to getting a business off to the right start. Taking on more than you can handle is only likely to damage your reputation rather than enhancing it.
Moving on from the past
It’s very easy to get caught up in something when creating a business and this is why any new entrepreneur should attempt to forget what they have achieved previously.
Just because a previous job role was based around software or accountancy for example, this shouldn’t mean that the new company is based on the same ideas.
It’s all part of the transition from being an employee to developing ideas and the quicker it is made the more beneficial it can be to a company in the long term.
Having the finances to start
There is a lot more to starting a business than merely hiring office space and equipment – as outgoings such as salaries and electricity bills can quickly start to mount up.
Insurance and legal fees, as well as other outstanding overheads, can all eat in to potential profits while selling items on credit can also have its pitfalls.
Regardless of where the money comes from, finance must always be available to deal with any emergency issues and to fund expansion.
Factoring in all known costs and still having a little left over is essential if a business is to survive and avoid the common problems that SMEs come up against.
Be prepared to put time and effort into the project
In the early days of a business, it can require a lot of time and effort to get everything up and running, so it’s important not to limit the time that can be spent on getting things started.
While the idea of a regular nine to five job can be appealing, the chances are that any new business will require much more time to be invested within it.
The hard work aspect is all part of getting a company recognised and onto the business ladder – something which cannot be achieved easily.
Wise investments
When looking for investors it’s important to consider what they can add to the business – there’s no point just picking one that offers a lot if they don’t develop the company.
Finding experienced people in a wide range of fields is especially recommended, as it provides a resource that can save money in the long run.
Starting a business is by no means easy, and it’s important to take a lot of aspects into account to ensure the longevity of such a project.
By Phil Smith