According to the U.S. Bureau of Labor Statistics (BLS), around 20% of startups fail in their first year. Another 34% close or go bankrupt within their first two years in business. 50% of startups can’t make it to their 5th year, and only 25% stay in business for more than 15 years. Those are astonishing statistics. You should avoid these business mistakes so you’re part of the 15%.
At some point, we’ve all been rookies in this entrepreneurial game. But here are six fundamentals mistakes to avoid so you can be a winner.
1. Not Understanding Your Target Audience
Many startups make the business mistake of conducting little to no research. Preventing them from understanding their target audience at the start of their business.
Failing to conduct target audience research is more common than you think. Yet, it has never been easier to conduct extensive research on your target audience.
The following tools can help you with your product research:
- Google Trends
- Facebook Insights
To help you determine product market fit. Ask yourself these questions:
- What will my company’s product or service solve?
- For whom is my product made?
- Who is my competition?
- What do my potential customers gain from me that they don’t gain from my competitors?
2. Inadequate Financial Preparation
There have been many studies and research pointing to how humans think. Research has found that we tend to picture the best-case scenario in all situations. You know. A glass half full type of thinking. This robs us of the opportunity to be objective. This is one of the easiest business mistakes to avoid.
It’s important that we are clear about what the financial considerations are for your business to avoid mistakes. You don’t need to be a CPA to determine startup and operating costs. A simple spreadsheet or white session is all you need. If you find that tough, hire a bookkeeper to get you started.
These inaccurate assumptions are why many businesses underestimate how much financial preparation is required for their business.
To get you on the right financial track. Begin to ask yourself the following questions:
- How much investment are we going to need at startup?
- Do we need outside investment?
- Who will fund the operating expenses?
- How much will be charged to credit cards?
- Who will be our primary vendors?
- Are the operating costs expected to stay consistent or fluctuate?
3. Not Taking Advice from Others
Many new entrepreneurs start with a big idea for a business with a clear direction. But sometimes we get derailed and we need help.
Don’t be this person. Ask and seek advice from those in your industry. If you don’t have someone in your network that can offer you sound advice. Hire a consultant or get a free business mentor session for Score.
Hiring an expert on the matter or even setting up an advisory board can be beneficial to your company. All it takes is to admit that you need help to give you the opportunity for your business to flourish.
“Success is walking from failure to failure with no loss of enthusiasm.” – Winston Churchill
4. Failing to Learn from Feedback
The only way that someone can grow is to learn from constructive criticism.
Both positive and negative feedback can be useful in growing your business. It provides valuable first-hand user feedback about the benefits and features of your product or service. Based on that feedback, you can make your product better.
Now many people make the mistake of learning from negative feedback only. Positive feedback is as powerful because it lets you know that you are doing something well. It also indicates that you are headed in the right direction.
When you receive negative feedback, don’t be upset about it. Conduct further research to determine the reason for the negative feedback.
Here are some questions that will help you gather more insightful data into the feedback you received. Further allowing you to create a more meaningful product or service.
What is this feedback about?
- Why is there a concern? What is the topic that they are talking about? Is it the pricing? Product features? Presentation?
Why was this feedback made?
- Was this part of a backlash? Was it because we said something wrong or inappropriate?
· How can I fix this problem?
- What is your pricing? How can we provide more value? Can you add a new feature to our product to fix this issue?
When you have figured out the answers to these questions. You can formulate a plan to fix the problem and mitigate one of the few business mistakes.
5. Being Afraid to Fail. Don’t make this mistake.
Can you imagine if Kobe Bryant was afraid to shoot a hoop? Imagine if Bill Gates was afraid no one was going to like his product? Imagine Steve Jobs being afraid that Apple was a stupid name and that no one would like it.
Just think about how the world be if these individuals didn’t believe in themselves.
The point is that success never comes without failure. You will probably have to fail a thousand times to truly succeed that one time. As an entrepreneur, you need to be willing to take risks that might put your business at risk.
When you fail you do not start from rock bottom. Because what you have gained from that failure is experience.