Starting a business is stressful and difficult. Eight out of 10 startups fail within the first 18 months. No doubt, you don’t want to be one them! Here are the four pitfalls to avoid if you want to build a successful, long- lasting business.
Blurry business vision
You absolutely need a well-written business plan. At this stage, you should have a clear destination and a path for getting there. By having a solid marketing plan and defining your competition, you can make sure to have a successful business.
But one of the essential elements of the business plan is the financial plan. You don’t want to underestimate your starting costs.
Weak legal bases
Anyone who tells you that you don’t need a contract is wrong! You need a contract whenever there is a mutually beneficial relationship. It is the only way to ensure that the other party complies with its part of the deal.
A contract is essential when you hire an employee or solicit a service, but your business can’t survive without well-drafted terms and conditions (T&Cs). This is a standard contract that you will be able to use and reuse with your customers and clients. It includes pricing, penalties, and limitation on liability.
When it comes to employment, you get what you pay for. You should focus on assembling a great team. Salaries are not the main criteria; competence and talent are.
You need to create a close relationship with your team and be clear about your common goals. Building a team is not only about leadership and skills, but also about resources. As your team grows, so will your business and hopefully your revenue.
Another area within employment to monitor closely is how you label your workers. A cheaper alternative to hiring employees is to hire contractors or consultants. But mischaracterisation can lead to a violation of employment law. If you don’t set the right contract, it could have expensive and troublesome consequences.
Lack of business expertise such as in finance or sales can sign the downfall of your startup. Overexpansion is one of the dangers of being an amateur. In the worst-case scenario, it can lead you to bankruptcy. As a new business, you should rather focus on slow and steady growth. The key is to build a solid customer base and have a good cash flow. Being prudent is completely different from repressing your growth.