Most start-ups make mistakes when they are founded.
The step into self-employment should be well thought out. There are many founders who just get started and “try out” their idea. Then there are founders who plan everything down to the smallest detail and only then get started. Neither one or the other is correct, because the different people are, so are the approaches. But the fact is: Usually between 80 and 90 percent of start-ups fail in the first few years. Why is that? Often due to the same mistakes made during the foundation. So that you don’t make the same mistakes, we want to list the ten most common mistakes that can quickly shatter your dream of self-employment.
MISTAKE 1: LACK OF BUSINESS KNOWLEDGE
The lack of knowledge in business administration is one of the most common mistakes when starting a business or the reason why entrepreneurs go bankrupt. As an entrepreneur, it is not only important to you that you always have good new ideas, because you can’t run a company successfully on that alone. You also need to be familiar with numbers, which is why business knowledge is imperative. Of course, you can’t do everything. But when founding a company, it is of great importance that you then bring such knowledge into the house in the form of a partner or an external person.
MISTAKE 2: NOT LOSING TOUCH WITH REALITY
Many founders are driven into bankruptcy by the thought and desire to get rich quickly. But the chic company car does not have to be in front of the door shortly after the company was founded. You shouldn’t just hire staff so you don’t have to do anything yourself. Anyone who loses their sense of reality and wants to be wealthy very quickly can be out of the window relatively quickly. That’s why you should always act with the necessary foresight. Keep a close eye on your monthly fixed costs and constantly monitor the market and your own market position.
MISTAKE 3: LACK OF FAMILY SUPPORT
If you are a founder and have a family, then your family must be fully behind you and your idea. It must be clear from the start that a founder like you cannot have a regular 40-hour week. 60 hours and more are quite normal and there is not much private time with the family. This can quickly lead to tensions and often to failure – either in the private sphere or with your company. So, make sure your family has your back and everyone is on the same page.
MISTAKE 4: MARKET KNOWLEDGE IS INSUFFICIENT
A lack of market knowledge is also one of the most common mistakes when starting a business. Because before you even enter the market as a founder, you must analyze it carefully. If you don’t know your market and your competitors well and don’t understand the movements in the market, you can very quickly be side-lined and close your shop. Here, too, the foresight mentioned at the beginning should help to identify trends at an early stage or to detect gaps in the market.
MISTAKE 5: CHOOSING THE WRONG AUDIENCE
No matter how well thought out your product or service is, it will not be a success if it does not benefit the customer. So, you have to know exactly what needs your potential customers have and whether you can reach them with your product. If the customer sees a direct benefit from your product, then they will also spend money on it. So, you have to think very carefully and analyze which target group you want to address.
MISTAKE 6: NO CLEAR USP
If you want to be successful as a founder on the market today, you need a unique selling proposition. So, you have to differentiate yourself from the competition. It doesn’t help you if you come onto the market with your brilliant idea, a competitor has a similar product or even copies yours and sells the product to the customer at a significantly lower price. Then you’ll be out of business sooner than you can imagine. So always make sure that you have the best price, offer the best service or are simply different and better than the competition.
MISTAKE 7: POORLY PLANNED FINANCING
Many founders fail due to poorly planned financing. That is why financing is one of the most common mistakes when starting a business. Already at the planning stage you have to proceed with foresight. You should plan everything so that you are prepared for all eventualities. Liquidity planning must give you enough room to make the necessary investments. It is therefore better to plan a little more than too little. As with any business, your financial plan must be watertight. The moment the first financial bottlenecks arise, the end is not far away.
MISTAKE 8: ORDER IS A FOREIGN CONCEPT
Without order in your company, it doesn’t work. The operational processes must work, business books have to be kept clean from the start and plans have to be drawn up in detail in advance. It is important for you that you always have everything in view and that you can react or act in good time even if there are problems.
MISTAKE 9: THE TEAM HAS TO PASS
Anyone who becomes self-employed as a team needs know-how for every area in their ranks. But even for single entrepreneurs who are slowly putting together their team of employees, the following applies: the cooperation must be coordinated. It won’t do you any good if you have people on the team who only know about technology. You need someone who knows the technology, someone who handles the finances and someone who knows how to manage people. To name just a few examples here. There must be no one-sided knowledge, but all important and necessary topics that are essential for a company must be covered. It is not only important to pay attention to expertise, but also to interpersonal relationships.
MISTAKE 10: OVERCONFIDENCE
Another mistake when starting a business is the fact that many founders totally overestimate themselves. Always remember that nobody is perfect, including you. So don’t just concentrate on your strengths alone, which are very important for your success. But be prepared to always learn something new. Accept help when it is offered to you and reflect on yourself. Above all, be honest about what you have done well, what can be improved and where possible dangers could be lurking.
Conclusion: Mistakes when founding a start-up happen quickly
So you see, mistakes happen faster than you probably think. Above all, you should realize that sometimes it only takes one mistake for start-ups to fail. However, if you have an eye on all potential sources of danger and are sufficiently prepared, you can easily avoid these ten sources of error.