5 common startup business mistakes you need to avoid
Posted on: June 1, 2016 by WorkPlace One
There are many reasons new startup companies in Canada are prone to failure. According to the director of small business of Intuit Canada, roughly 15 percent of new startups in Canada fail in year one, while 50 percent won’t see the end of year five. As most startups have lower financial flexibility, they are prone to making more mistakes as they seek to get competitive. Here are some common mistakes and how you can avoid them:
1. You’re hiring the wrong people
Every hockey team has its role player. You have your goal scorers, defencemen, goalie and the all-around guy who can chip a goal in the net or make a big play once in a while. In the earlier stages of your business you should look to add employees who have a varied skill set and those you can rely on to perform. Like an all-around player, you know they can come through for you on any task. You should start looking at employees who work in one primary discipline or specialized area once you have more capital.
2. Insufficient advertising
It’s simple. If no one can find your business no one will do business with you. To quote a nearly 100-year-old advertising poem:
“Man wakes up in the morning, after sleeping under an advertised blanket, on an advertised mattress; takes off advertised pajamas; takes a shower in an advertised tub; shaves with an advertised razor; washes with advertised soap; powders his face with an advertised powder; wears his advertised underwear, shirt, collar, shoes, suit, handkerchief; sits down to breakfast of an advertised cereal; drinks advertised coffee; puts on an advertised hat; lights an advertised cigar; rides to his office in an advertised car on advertised tires; where he refuses to advertise on the grounds that advertising does not pay.”
In the first couple years of your new business, you should be allocating roughly around 20% or just below to your advertising/marketing budget.
3. Not having an online presence
Every company, little or small, should have an online presence. Considering that 97% of consumers actively shop for products and services online, you can't afford to not have a website. Unfortunately, 51% of small businesses don't have a website, therefore are not able to generate additional traffic online. Once you have a website, you're not finished. Regular content updates and social promotion, are some of the ways to increase your online presence.
4. Poor pricing strategies
It is crucial for younger companies to have a solid pricing strategy in place. Finding the right price point for your product or service is a lot like hanging a picture on a wall. You need to find that right sweet spot in the middle that provides a great balance. If you price too high your customer may walk away because you’re overcharging and if you are charging too low, your customer may perceive that your product or service is inferior in some way. It’s also critical that you don’t undersell yourself. Even though you are a smaller company you still provide a service for your clients and you can’t just accept the cheapest offers that come your way.
5. Not being open to constructive criticism
It’s your new business. The hours are long and you’ve put a lot on the line. You wear your new company's logo like a heart on your sleeve and every decision counts. It’s easy to get wrapped up in trying to perfect everything or micromanage every aspect of the business, but you need to step back sometimes and listen to your employees’ and peers’ advice. Small businesses get into trouble when the owner has tunnel vision and only sees thing a certain way.
6. Running before you walk
It’s always a good strategy to look at some of your more established competition around you and trying to match or beat what they offer. But some of those companies have expensive websites, advertising budgets, a big downtown Toronto office rental, more employees and a higher cash flow to afford all of those things.
For example, many small companies believe it’s vital for their business to have a nice downtown office space you can impress your clients with. However, many are sacrificing thousands of dollars on these larger offices that they cannot afford. In your businesses infancy, it’s important that you don’t start making bigger long-term commitments that look like a tattoo of an ex-love when unexpected variable costs come down the line. There are many virtual office locations as well as modern shared office spaces in Toronto that can facilitate your company's needs at a fraction of the cost as well as uphold your company's professional status quo.
Getting a startup to sustain success is a challenge - but it’s not impossible. When it comes to making a decision on your Kitchener or Toronto office space, Workplace One offers all its members a permanent business address and professional working environments with flexible work space options for any business. Contact Workplace One to find how we can help your business not only survive, but succeed.