Consultants Speak: Common Mistakes By Startups
Featured | Guest Author | April 19, 2010 at 8:54 am
Following points have been gathered by collating views of various contributors on our LinkedIn Group.
1, Over projection of business plans(conservative plans are always better)
2.Quick money/overnight money overtaking passion as driver.
3. Too large work force instead of optimum
4. Less control over expenses
5.Failure to asses results MoM/QoQ (since startups are too small hence half yearly or yearly assessment are only good when u have completed 2+ yrs).
6. Poor response strategy to any eventuality or changing economic landscape/dynamics & customer preference/feedback.
7. Enough working capital/monetary support for at least 2 yrs.
8. Loss of faith in the objective/basis of startup.
9. Jumping on any sort of money/investor coming across
10. Diversifying too early
11. Taking curent customers for granted in a zest to get new ones
12. Trying to sell to anyone and everyone
13. Not creating a USP for the product/service
14. Having the wrong people on board (Including friends instead of business partners)
15. Not spending enough time in the initial market research and analysis phase of your venture development.
16. Understanding customer and market sentiments to calculate the size of the market in which your business would be operated. This is very essential when it comes to forecasting sales revenues.
17. Not sticking to your multiples. Remember, multiples are not concrete, when you chose – learn to defend.
18. Too much spending on workforce and office settings.
19. Focusing too much on volume than profit
20. Lack of a proper exit strategy and contingency plan. Investors are very keen on understanding how they can exit, in case the sales do not pick up.
21. Consistent failure in Re-Innovation(once u come up with some new concept/service, people tend to copy that in next 3-6 months, hence one need to keep re-innovating the concept to make it more unique)
21. Failure to focus on your core competency
22. Failure to make an employee owned company(ownership must be distributed so that the sense of belongingness grows, attrition rate remains minimum possible, expenses can can be controlled).
23. Failure to revisit revenue model in a span of every 12-18 months.
24. Lack of patience is also one of the reason.
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Credits: Ashish Jhajharia , Rajat Agrawal, Anand Rao , Kalpesh Modi, Gajanan Bochare
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Tags: Consulting, Start up
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I agree with your assessment but I believe more than an idea or projections, execution is the key to a successful business and this is where most of the start-ups fail. One of the most common mistakes is lack of team-spirit. Though it looks great in the initial phase, team skills try to fade as time passes by as people try to seek different goals or objectives. I personally believe Trust, integrity and team skills are some of the most important aspects in a start-up.
Its very important to research and define your target segment. Seeling to everyone does not make sense and where the companies fail.
Grow gradually and steadily and maintain your balance sheets healthy right from start.
Regards,
Gautam