5 Tips from Your Future Self on How to Not Mess Up Your First Startup
If every entrepreneur were given the chance to go back in time and correct their mistakes – most would jump at the opportunity.
Starting a business comes with plenty of pitfalls that none of us entrepreneurs can avoid along the journey.
But imagine if you had the chance to contact your future self and learn of all the mistakes you’ve made.
Wouldn’t that help your current business to avoid unseen failures?
That’s exactly what this guide is about.
THE UNSEEN NUISANCES INVOLVED TO LAUNCH A SUCCESSFUL STARTUP
One of the biggest mistakes you commit when launching a business is having no business acumen to go with your startup.
The difference between a seasoned entrepreneur and a new entrepreneur is – ‘Experience’.
The first thing to do is take notes and soak up all the life experiences you can as you develop your business plan.
Don’t be afraid of committing mistakes but also make it a point to never repeat them.
Below are a few areas where entrepreneurs usually go wrong with their startup idea.
Coming up with an Intelligent Business Plan
A business with no plan is a business with no future. Imagine constructing a building without any blueprints, you’d have several issues – the floors aren’t aligned, the space for the lobby is too small, the stairs aren’t the right size, etc.
A business plan enables an entrepreneur to come up with various phases to develop his or her idea.
For example, if Steve Jobs had founded Apple for no apparent reason other than to make a profit, he’d probably not even make it into the top 1000 of Forbes’s successful businesses.
Apple was created with an idea to solve the technical problems of people and to provide them with jobs.
Apart from Apple earning a profit with its products, developers of apps make a profit on the app store, musicians make a profit from selling tracks on iTunes, retailers make a profit selling products of Apple, and the list goes on.
Apple isn’t famous because the founders decided to make a profit for themselves, it’s profitable due to a social revolution that was invented at the core of its business plan.
Hence, it’s important to come up with a smart business plan before you launch. Can you solve an ongoing problem?
Maybe you’ve got a unique selling proposition that would attract an audience or maybe you can sway the investors with a unique product.
A business idea is successful if it has a passion and vision behind its inception.
Permits, Licenses, and Copyrights
Often entrepreneurs have a great idea and are carried away with its development. They don’t realize the necessity to perform background checks on copyright infringements.
Months later, they are woken up by a lawsuit claiming money for damages.
That’s when realization dawns and the entrepreneur wishes he could go back in time to pay more attention.
Every business name needs to pass through the eyes of legal law enforcement. Double check your business cards and marketing strategies to make sure you aren’t stepping on other toes.
When registering a business name, it’s a good idea to visit domain registrars like GoDaddy to ensure the name isn’t taken.
If the name is taken, it will probably cost you a fortune to negotiate between the website owner, in the end, it’s wise to come up with a new name altogether.
Permits and licenses are necessary for a business to obtain and to function with no problems. Imagine you’re a T-shirt manufacturer and you’ve decided to print cartoons on your apparel.
You’ll notice that if you illegally borrow characters such as Mickey Mouse or Spiderman to print on your t-shirts, you’ll be slapped with a notice from the respective companies.
That’s why it’s necessary to contact these companies beforehand and gain licenses by paying a fee.
Understand Taxes and Financials
Every business must own a bank account to communicate your finances to the IRS.
The Internal Revenue Service is a government-based organization that regulates taxes and investigates companies that aren’t paying their taxes on time.
Keeping the IRS away from your backyard is the largest benefit for your future self.
Having a transparent financial record allows you to conduct business operations without the fear of closure.
The next important factor is having a record of all your financials in a neat format.
Here is a list of tips to keep in mind.
- Ensure your budget is created and add a 15% increased cash flow to the budget to iron out the unforeseen events
- Track every speck of dollar that goes out of your bank account. Utilize accounting software such as FreshBooks for invoices and accounting tasks
- Time is also considered a monetary value when you’re in business. Ensure every minute of your time is productive and on target.
- Net revenue is the total income your company makes. Net worth is what you’re worth and the money you take home. Don’t mix the two.
- Don’t splurge on unwanted assets in the beginning. Remember, the initial phase is all about making do with a tight budget and much of this phase is about learning and not investing.
Marketing & Sales
A business that has no active marketing tactics is a sinking business. Marketing and sales are often considered as the foundation of a successful business. Knowing about digital marketing is especially important if you are starting an ecommerce startup.
With no marketing, you receive fewer sales and with dwindling sales, your business plummets.
Here are 4 marketing and sales tips to consider for your first startup.
1. Customers Don’t Buy What They Can’t Trust
Your biggest hurdle during your launch is to not just sell your products but to sell the benefits of your product.
After all, why should a customer trust you when you’ve just opened shop yesterday and expect to take their money today.
Convincing them your product is cost effective and is of top quality is how you beat out the competition by offering a better value.
2. Soft Launch Your Product
Take out your local map. Circle a small area that you’re familiar with. Now begin handing over samples of your product to the people in the area.
Don’t forget to ask them for their feedback and to get a live reaction to the product.
This is important to ensure all the drawbacks of the product are taken care of before launching to a massive audience.
3. Advertise Through Multiple Avenues
Don’t just use a marketing tactic from that was hip in the ‘80s, it’s time to get initiated with the latest digital methods such as Facebook Ads and Social media marketing to inform your customers.
Don’t just stop there, continue marketing your product via email marketing and even hire an advertising guy to pass out fliers around the neighboring blocks.
4. Offer Customer Rewards
A happy customer is a returning customer. To keep a customer returning to your product or service, offer them exceptional service combined with a referral reward system.
Provide them with attractive gifts for reaching a milestone – E.g. 50 purchases earn them a toaster; 10 referrals earn them a beauty salon gift voucher.
5 TIPS SENT BACK THROUGH TIME BY YOUR FUTURE SELF TO PREPARE YOU FOR YOUR FIRST STARTUP
1. “Manage Your Finances Better”
Poor management of finances can blow up your startup from lasting even a year from your inception.
Overfunding unimportant resources and underfunding critical resources is a big mistake made by new startup owners.
Follow the right way to ensure you maintain a smooth cash flow into your business. Here are ways to spend your finances wisely.
Track your expenses
The first thing to do is to keep an eye out on your cash flow. Write down every minor expense in a book or utilize software like QuickBooks for easy accounting.
Tracking your cash flow helps keep things nice and organized.
A startup during the beginning phase begins to snowball the budget, so consider hiring a professional accountant to ensure your budget doesn’t overflow.
Limit expenditure during your initial phase
You aren’t going to be making profits right from the get-go, so don’t invest more than necessary during your first phase.
Keep the capital to a minimum and only invest to keep the operations running.
Spending your budget on luxurious furniture and over-the-top gadgets will only bring ruin to your business when you run out of funds to sustain.
Customer Acquisition is the key
A business can only operate if you’ve got active customers that place orders from you.
Without customers, you’ll run your business to the ground with no upkeep of funds to maintain.
Spend the bulk of your budget on acquiring customers and build up your marketing channel to secure your product.
Don’t forget to pay your own bills
It’s easy to lose track that your business was created to ensure that you live a comfortable life. While it’s necessary to save up during the first steps of launching a business, you simply can’t survive on peanuts.
Withdraw a set amount of money and stick to it every month.
It’s critical to remember that your business isn’t your private stash to fund you on a rainy day.
2. “Avoiding Bad Business Partners”
At first, a business partnership seems like a great idea, after all, you get to share your losses and gain more capital.
But the risk of bringing aboard a bad business partner is essentially setting sail with a hole in your ship.
Ask yourself a few questions before you decide to bring a business partner in.
Why exactly do I need a business partner for? (More capital, experience, security, etc.?)
Am I willing to consider outside decisions to factor into my business?
Do I have the final word when it comes to decision-making?
How long do I intend to partner up before I take full ownership of the business?
Answering the following questions will provide you with the insight and if you still decide to go through with a business partner.
We’ve listed 5 red flags to identify a bad business partner.
i. Poor Communication
When you receive no answer for days and weeks and your calls/emails go unattended, your business partner has no interests invested in the business and is in it purely for the profits.
ii. No Accountability
If you find your business partner blaming your employees or someone in the workforce constantly, it’s probably because your partner doesn’t like to shoulder any responsibility.
Acts like this need to be cleaned up or the future will look.
iii. No Resolution during Conflicts
A partnership usually erupts into minor conflicts that if left unattended become gaping holes for the future of the company.
If either of you doesn’t decide to sit down and solve the problem, the business takes the brunt of the damage.
If your partner finds ways to excuse himself from the mess, it may be time to oust him.
iv. Different Values
One certain way to tell that your business partner has no future in your business is when you’ve both got different values and different business goals.
Imagine having two captains on a ship while each of them tries to steer in a different direction – you guessed it, it doesn’t end well.
3. “Working with Rough Clients”
Clients are the bread and butter of your business.
Taking a closer look at them before you sign a contract is essential if you don’t want to end up with unpaid settlements and legal battles stretching for years.
Fortunately, like bad business partners, there are ways to tell if your client will eventually eat into your business or not.
Here are 4 ways to tell them apart.
i. Their Ego does the Talking
Clients that like to be convinced that your product is right for them are either full of themselves or don’t have the knowledge of your product.
Either way, both are considered red flags that your client will eventually morph into a drama queen, complaining his way through every minor hiccup.
ii. They are Never Happy with Your Results
Pleasing bad clients is like getting a wolf to wear a wedding gown.
It’s risky and unsightly. Your best work will be met with unappreciated eyes and you’ll be mocked until you doubt your own self. Stay away from such disapproving eyes.
iii. Late Settlements
Without a doubt, a bad client will delay payments or even find ways to drag it out.
The best way to tackle late payments is to demand upfront fees and to charge a late payment charge.
This will keep them from delaying payments and will be forced to pay up to get their work done.
iv. They Want the Special Treatment
When clients demand special treatment be provided to them, chances are you’ll endure a hellish experience if you continue working as there is no limit to their requests.
Either through discounts in your services or expecting additional payload, greedy clients thrive on the elitist mindset and it’s in your best interests to stay clear from such terms.
During your initial days, you’ll be tempted to accept any clients to commence work and bring in profits.
But realize this, the standard you set for your company at the start is usually the direction your company takes in the future.
Avoid such clients and spare yourself from the migraines.
4. “Not Putting in Enough Time”
If you thought a startup doesn’t need much time, you’re dead wrong.
During the beginning phase, a startup requires ample amounts of your time to iron out plenty of issues that could plague your business in the future.
Whether it’s writing code for 100 hours a week or scheduling meetings with the big sharks.
As a startup owner, it’s necessary for you to sacrifice your free time and invest all your hours into identifying how to sell your service or product.
According to a report created by the Startup Genome, over 90% of startups fail. To be a part of the elusive 10%, you must give all 24 hours of your time to strike gold.
Here are 7 ways to manage time in an efficient manner to get the most work done for your startup.
i. Schedule things before you sleep
Having a schedule for the next day ensures you don’t slack off when there’s work to be done.
Keep a few minutes before bed aside for writing the work schedule for the following day.
Whether it’s managing meetings or planning a big project, do it just before you hit the sack.
ii. Delegate as much as you possibly can
Your time is limited. Your time is extremely valuable.
Instead of spending time doing things that you aren’t good at, do things that you are good at like public speaking or creative brainstorming. Leave the business operations to your employees.
iii. Organize lunch meetings
To ensure you don’t waste any time, have your meetings during a lunch break.
This way you get to refuel energy while you go over important stuff without wasting precious time.
iv. Reminders are great
Whether it’s the good old alarm clock or utilizing Google Calendar, reminders provide you with a way to not get lost in the hectic schedule of your workday.
v. Virtual Meetings
You won’t believe the amount of time you’ll save by having a video conversation with your client over a video conferencing app like Skype.
You save the time it takes to travel, and the energy can be put into more productive areas.
vi. Block out unnecessary apps
Your smartphone is either your best friend or your biggest enemy.
There are plenty of disruptive apps such as games and social media to steal your time away without you knowing about it.
vii. Start your day early
The importance of waking up early can’t be stressed enough.
You gain 14 to 20 hours a day just by waking up 2 hours earlier than your usual time.
Early mornings are some of the most productive times to work due to increased mental alertness and the serenity that comes with the break of dawn.
5. “Not Investing Enough”
The famous quote – “To make money, you’ll need to invest money” is a solid success formula for new startup owners.
While it’s necessary to spend wisely without overspending, a business only grows when you invest money into it.
One of the biggest reasons for startups to tip over in the first year of their launch is due to financial constraints.
Not knowing when to invest and never knowing when to save is the biggest confusion many startups owners face.
In order to run a company, you need funds to trickle in without them drying up.
Here are 5 ways to secure funds and keep your startup running.
The way a crowdfunding platform works is that a business owner pitches an idea and demonstrates the way his business works and how he generates profits.
If the investors like your idea, they begin to pool their funds into your business model.
ii. Venture Capital Funds
A more advanced funding solution that is run by a group of professionals who seek out high-value businesses.
If your business happens to fit their prospects, you’ve just got an unlimited revenue source to fund your startup.
If your startup is a small one, you can conveniently secure loans from friends and family.
The benefit of securing loans from these sources is that your friends and family usually never charge you high interest and would happily provide you with the starting funds.
There are plenty of startup contests that offer several prizes about funding your idea.
If you’ve got a unique concept that can demonstrate a solution to a key problem, then you’ll have no problem in securing a prize from these competitions.
Sometimes, the best way to get a loan is to come clean and pay your interest upfront.
This is especially a good idea when you know that there is exceptional growth in your business.
Other non-conventional ways to secure small loans are credit cards, selling less prioritized assets, etc.
And there you have it, 5 exceptional tips on how to avoid some of the biggest pitfalls of startup history.
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