Articles Tagged ‘business mistakes’

Top Ten Startup Mistakes…that Almost Always Lead To Business Failure

Thursday, December 1st, 2011

Many startup ideas fail to ever be launched and many, many fail within the first year or two. In most cases, the failure has nothing to do with the business idea, but how the business side is handled. The business of entrepreneurship is business first, then operations (what your business actually does). The Top Ten startup mistakes that lead to ultimate failure are:

1. Insufficient Startup Idea Development — Most startups do not fail because the business idea is bad. The problem is that many first-time entrepreneurs fail to actually plan the business before sinking cash into the startup. No matter how great a business idea is, it can’t succeed without detailed planning. Take the time to work through every angle of your business idea. Not only will you have a better grasp of how far your business can go, you will also reduce your risk and prepare yourself to make the best decisions as you go.

2. Failure to Understand and Comply with Legal Obligations — An unbelievable number of entrepreneurs leave the legal aspects of business startup to someone else or, worse, ignore them altogether. Eventually this failure to comply with legal obligations will come back to bite you and the outcome can be devastating. Every entrepreneur must understand and secure all necessary licenses and permits, and set up compliance systems for taxes and fees due to the local, state, and federal government.

3. Poor (or no) Marketing Planning – Marketing is the lifeblood of every business startup, and it is more than business cards and a yellow pages ad. A significant portion of your time and expense budget should be dedicated to marketing. Poor or no marketing equals no sales…equals business failure. Do your homework before you launch to identify your target markets, figure out how to best reach them, and establish clear objectives and evaluations to ensure your marketing efforts are paying off.

4. Poor (or no) Financial Management — Success in business is all about the bottom line — no profit, no business. Keeping the books correct is half the battle. Too many first-time entrepreneurs are willing to turn over complete responsibility of the books to someone else — a dangerous decision that very often leads to business failure. Reviewing and analyzing the financial reports is the other half. It is critical for every business owner to understand what the financial reports mean and how a change in one area affects all the others. Cash flow issues are also major financial management problems for many startups in the earliest stages. Good planning before launching a startup will clarify how much cash on hand your business idea will need to succeed. Whether you consider yourself a numbers person or not, as a business owner it is critical that you take responsibility for learning and applying basic financial management skills if you want to succeed.
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