So you’ve got an idea that’s going to revolutionize an industry. You’ve got some startup capital to invest in your business, and you’re ready to dedicate yourself to your startup. But before you launch your product or service, there are mistakes you can easily avoid when starting your business that will sink your startup before it starts up.
1. Write a business plan before doing anything else
You might be thinking, “But I don’t need any funding,” or “I’m bootstrapping this business,” or “I have to be first to market.” And none of that matters. A business plan isn’t just a way to entice investors to provide funding for your startup. It’s a way for you to get to get to know your business intimately.
Most startups that fail do so because the CEO provided a product or service that didn’t solve a problem. Don’t try to solve a problem people don’t know they have; solve a problem they know they have. Writing a business plan is the best way to determine whether your business is solving a problem people know they have.
A business plan will also help prepare content for your website. You’ll nail down your company’s mission and answer key questions customers will have about your business. You’ll likely realize where a section of your business plan fits on your website while you’re writing it.
Most importantly, a business plan will help you prepare for each phase of your startup process, both operationally and financially. You’ll know how much startup capital you’ll need to start your business and have a budget so you don’t overextend yourself. You’ll also know who you’ll need to help start your business, and the list is probably longer than you imagined.
2. Invest in people before your product or service
The most important assets a company has is its employees, and it’s no different for a startup. Before you invest in a prototype or technology, surrounding yourself with the right people can help you avoid a failed launch of your business.
The first people you need are potential customers. You’re not selling them at this point, but their needs should dictate yours and that of your company. They can provide valuable feedback about your product or service that will help you perfect it prior to launch. Talk to at least 15 people you think would have an interest in your product or service. Let them know what you intend to offer and how they would improve it.
One of the best investments you can make in your business is in public relations. You might think you can do this work yourself, especially after writing a business plan. After all, you know your business better than anyone else. But journalists and editors of newspapers, magazines and websites are more apt to publish something about your business when it comes from a PR person or firm with whom they’re familiar. A press release received from an email address that contains the same business name as the press release doesn’t exactly scream “trust me.” A third party writing about your business, though, does have some validity, even though you’re paying that party.
You’ll likely pay more than you think, too, according to Tom Hogan and Carol Broadbent’s new book, The Ultimate Start-up Guide: Marketing Lessons, War Stories, and Hard-won Advice from Leading Venture Capitalists and Angel Investors. Hogan and Broadbent recommend you never have a PR firm work on your account part-time and to hire a local firm where available. You should also seek out a PR firm that has contacts with media members who publish to your target market. And when you set the initial meeting, request that the people who will be actually working on your account are at the meeting. Some firms will send principal members of the firm who will never actually work on your account. Don’t allow them to pull the “bait-and-switch.”
Once you’ve chosen a PR firm to spread the word about your company, set regular updates and weekly meetings to keep everyone on the same page and make sure your goals are being accomplished. Also be sure that your public relations team is fulfilling your agreed-upon reporting style.
Another place new business owners attempt to save money is by not hiring a social media manager. Don’t do this unless you are a social media wizard that understands how to read Facebook Insights and analytics and where to best invest your social media advertising dollars. If your target market is Millenials, the majority, if not all of your advertising budget should be spent online.
3. Don’t do business with family
If you have a family member with money to invest in your startup, don’t allow them to do so unless they’re aware they could lose every penny and you know it won’t alter your relationship.
If your big brother is a social media wizard, think twice about hiring him as a social media manager. How will your big brother handle taking orders from you? Believe me, I know what it’s like to work with family. I made my senior film a family affair and ended up being ordered around by my elders despite being the writer, producer, assistant director and assistant editor of the film. While I didn’t follow their orders, it wasn’t pleasant for anyone else on set.
4. Don’t go it alone
You need a partner. While no one likes to give up equity in their company, investors like to see at least two people working together to start a business. It shows that both are capable of working with others. If you go it alone you don’t give that impression.
Having a partner also allows you to get a different perspective to make more well-informed decisions early in the startup process. Working within your own bubble puts your business in a bubble that will burst. Be open to new ideas and different perspectives because your business can benefit.
5. Find a mentor
You can find business executives that will give you free advice through SCORE, a nonprofit organization dedicated to helping small business get their start. Just enter your zip code and find business mentors near you. They’ll give you tips on your business plan, sales, advertising, operations management, etc.
There are also other tools available through SCORE. There are templates for business forms, webinars that will answer your immediate questions, and you can even register for a workshop in your area our schedule time with a business counselor. Even if you’re confident in your business plan, run it by a mentor to see what you and your partner are missing.
6. Stick to a timeline for launch and expansion
Whether you’re planning a soft launch or a massive grand opening, your launch is the first impression potential customers get of your business. Don’t screw it up too badly because it can sink your startup before is starts. Plan every part of your launch (and expansion) meticulously and stick to that timeline. Set goals that you want to reach within a certain period of time and then meet those short-term goals. If you say you’re going to launch on a certain date in press releases and advertisements, the worst thing you could do is push back your launch date because you’re behind schedule.
You’ll also want to set goals for expanding your company and meet those goals within a certain timeframe. If you say you want to open a new store within three years of launch, make sure you do your damndest to be in a position to do so. Meeting your goals gives you a lot to brag about as a company and CEO.
These are the easiest and most common mistakes you can avoid when starting your business, so don’t let one of them sink your startup before it starts.
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