The world NEEDS new, good businesses, but far too often they fail right at the start. And I hope to help you (or perhaps your friend) fix that.
Now, I’m an accountant in Long Island and Stamford, and we’re thick in the middle of our busiest season. (Which, I’m reminded — if you haven’t set up a time to go over your paperwork and have a chat about your file, please do so ASAP: (516) 449-2852)
But in my opinion, the entrepreneur is one of the most vital cogs of our economic and social system. And I get to know many of them and walk with them in the course of their venture. It’s a great privilege.
But the allure of the “startup” has perhaps faded in the public imagination. Many in the business world understand that there is little romance in raising a bunch of investment capital, only to have your business crash because of an out-of-control run rate with all of the investment burnt through fast.
Often, the product or service is not the primary issue. It lies in other places. And based on my experience in working with local Long Island and Stamford small businesses (both established and in their infancy), I’ve seen too many well-meaning entrepreneurs have so many things “right” in how they approach their new venture, but who end up shooting themselves in the foot.
So I’ve put together some of the primary mistakes made by those in startup mode, which are consistent causes of startup failure — but also, they are made by established businesses who have lost their way. I don’t want to see your business go the way of those I’ve seen do this; so watch out for these…
5 Entrepreneurial Mistakes That Can Cause Startup Failure by Michael Kessler
“Fortune favors the prepared mind.” -Louis Pasteur
Based on what I’ve seen in my work with local businesses, here are the big mistakes people make when starting a small business. These are by no means an exhaustive list, merely the most common — and eminently avoidable…
• Not having a CLEAR strategic action plan. A good business plan will be your roadmap to guide you through the first few months and years of your business. It should contain metrics that help you monitor costs as well as progress.
It doesn’t have to be fancy, or even something that would hold up under an investor’s scrutiny (though, certainly, if you’re going down that road, go the extra mile and make sure it’s good). But it does have to give you a roadmap to the goals you should be hitting by certain points — 3 months, 6 months, 12 months.
• Doing everything yourself. Even in a one-person operation, you’ll have your hands full. If you’re not in a position to hire employees, at least be ready to outsource the tasks that aren’t integral to your daily operations.
In this way, of course, you free yourself for the highest-level activities, such as marketing and sales.
• Targeting the wrong market. Nothing takes the place of solid market research before you launch your business. Find out who needs your product or service, where they are, what they expect to pay for it, and whether there are enough customers for you to survive.
But the BEST way to do this, is not to use statistics or data … it’s to start small, and sell something to your targeted market first which is very similar to what you are wanting to ultimately provide. Survey results are one thing, but having people “vote” with their pocketbook is a much better predictor of future results.
• Failure to prioritize sales. Your great idea for a product is only that–an idea. To actually grow, you’ve got to devote sufficient time to sales. Instead of trying to perfect your product, work on getting it out to customers. Let your customers help you perfect things, especially after you start selling to them.
• Underestimating your resources. No matter how detailed your business plan is, chances are your startup will require more time and money than you anticipate before it gets off the ground. Be patient, and plan for the long haul.
In fact, here’s a good rule of thumb:
1) Take your projected costs: double them.
2) Take your projected revenue: cut it in half.
If your proposition is still profitable, give it a shot.
And though we are very busy this time of year, we’re right here for you, if you need us: (516) 449-2852
Feel very free forward this article to a Long Island and Stamford business associate or client you know who could benefit from our assistance — or simply send them our way? These particular articles usually relate to business strategy because, as you know, we are Profitability Consultants also specializing in tax preparation and planning for Long Island and Stamford families and business owners. And we always make room for referrals from trusted sources like you.
Michael J. Kessler, CPA
PS–Join us for our show Business Profits In The Real World Saturday afternoons at 4 on 103.9FM WRCN where we bring you Long Island and The New York-Metro’s most successful business owners sharing how you too can bring your business to among the most profitable in your industry. No radio? No problem! Listen live at LINewsRadio.com – or can’t listen live? Hear our past shows at MichaelKesslerCPA.com