Have you just decided to start a business? That is great news.
“Based on my own experience and on what I see on my platform – says Alessandro Lazzaro, founder of Globartis, a global B2B website for small and medium businesses, including startups – I can tell you that starting a business is one of the most challenging but rewarding activities that you could ever do in your life.”
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Once upon a time, only the brave ones decided not to pursue a career in business and start their own company.
Nowadays, we have many more opportunities to start a business: social media, venture capital, a globalized world.
However, starting a business still has a high probability of failure. To minimize it, you should avoid the 7 deadly sins that lead to failure.
1: Focusing too Much on the Idea
A great idea is important to have a great business. However, as Thomas Edison famously said, a business is 1% inspiration and 99% perspiration. What that means is that, yes, you need a great idea to start a business, but that is just a tiny piece of the puzzle. Much more important is how you intend to realize your business.
My advice is not to focus too much on the idea; rather, start from a business where you think you have some competitive advantage, and try to innovate. You do not need to change the world, you just need to do something different from your competitors.
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2: Not Understanding the Business
Sounds crazy, is it not? Yet many entrepreneurs fall in love with an idea and start a business without even understanding the business they are in. Sadly, they discover the economics of the business too late: perhaps the business is too hard for them, perhaps there is too much competition, perhaps even the idea is not that good!
A red flag is when your potential clients try to avoid at all costs to pay you. Yes, they are interested, but if they are not willing to pay, it means that your business does not create any value.
3: Not Having a Marketing Channel
A great product is nothing if you do not have the right channels to marketize it.
Unfortunately, many entrepreneurs think that a product will sell by itself. That never happens, trust me. Even Apple spent decades building its brand of quality and status.
Desperate for finding a way to sell their products, startuppers turn to large distributors for potential partnerships, or to social media to sell directly.
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That is all fine, as long as you can, at some point, build your own sales channel: otherwise, you will end up paying high commission to the distributor and ballooning advertising bills to social networks.
4: Not Having a Realistic Revenue Model
That is another mistake that many who start a business do. Ironically, this may happen even to the ones that have a well oiled marketing channel but cannot find a way to monetize.
There is little advice that I can give you here: every business is different, but you should charge your clients only when you are sure you are creating value for them.
5: Not Having the Skills to Build the Product Yourself
This is typical of technology entrepreneurs that start building an app without having an idea of how to build it. Confession: I made this mistake too.
Luckily, we brought into the company another founder with all the IT skills that we needed. Otherwise, we would have never been able to create our platform: skyrocketing costs, malfunctioning stuff, not understanding what your supplier is really doing. No, you need to find a way to make the product yourself, or with the help of your in-house team.
6: Not Planning your Funds Correctly
How much money are you going to need to launch your business?
Trust me, way much more than what you have in mind at the moment. Give yourself a wide margin of safety, because it will take much longer than initially planned and there are going to be unforeseen events that will stretch your budget to the limit.
7: Not Being Willing to Commit 100% of Your Time
Many of us have in mind the 40-something entrepreneur plenty of money and free time. But that is the successful entrepreneur, who has previously committed 5, 10, 15 years of their lives to building up the business.
Many young people decide to establish a business with the naïve thinking that they will have more free time than working for a corporation. It does not work like that. Unfortunately, when they realize how much they have to work, they throw in the towel even if they might have good chances of success.
So, if you decide to start a business, be prepared to spend 7 days a week working on it, as long as it takes.