Starting up a company is inevitably going to be a stern challenge and a steep learning curve, whatever your goals are or what your role in the process happens to be.
As well as a workable concept and a reliable strategy, startups usually need a fair helping of good luck along their way to success. But they also need to avoid these 4 pitfalls that repeatedly trip up new businesses with big ideas and bigger ambitions.
1 – Launching too early
The essential idea behind being a startup company is this: it should involve the early-stage creation of a small company that then has a chance to grow into something much larger and more sustainable. That does not mean, though, that startups should be launched into competitive markets before the ideas, the products and the people involved are really ready for the fight. Starting up too early can leave a new business floundering and unable to take opportunities it might later have been well-placed to pursue.
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2 – Taking on too many employees, or too few
Knowing when and to what extent to expand the workforce of a startup company is never an easy equation to assess. Unfortunately, it can be absolutely critical in determining the success or failure of a startup. Having too few people on-board can leave a new business short-handed at crucial moments, while expanding a workforce prematurely can lead to burdensome overheads and a lack of operational flexibility.
3 – Borrowing too much money
It is easy to assume that successful startup companies are those that managed to borrow the most money in their earliest stages, as they looked to get their respective balls rolling. However, it is often the case that startups that borrow more money than they need end up with crippling financial commitments and debts they can’t service later down the line. Keeping finances as streamlined as possible is therefore usually a good goal for fresh startups to have in mind.
4 – Failing to delegate
For a startup company in any arena to move beyond being a neat idea and into the realms of real progress and potential, its founders need at some point to loosen their grip on the inner workings of the business. Strong leadership is very often essential to success for startups, but having too few people taking responsibility for all areas of operation can hamstring any new business, even startups that have great potential.
Nobody ever said that creating a successful company from scratch would be an easy process. The scale of the challenge is part of the appeal of starting up a company. There is plenty more that could still go wrong and scupper any startup’s best intentions. Bearing the above pitfalls in mind, however, might just help if you’re aiming to make it beyond a good beginning and towards true startup sustainability.
Author: John Baird is a personal finance and insolvency expert from www.scotlanddebt.co.uk. He specializes in advising people on how to manage their money and deal with their personal debt problems.