The path of an entrepreneur can be a bumpy one even at the best of times. It can especially be difficult to anticipate the problems that you’ll need to overcome early on in the life of your business.
It’s likely that you’ll find the issues you were most concerned about prove to be relatively straightforward, while problems that you felt were too small to prioritise become significantly more difficult to overcome.
There are many stumbling blocks that entrepreneurs may run into as they’re establishing their startup, so let’s take a deeper look at five of the most significant ones that can blight even the most experienced of business owners’ path to success.
Losing touch with your numbers
The early days of a business can leave entrepreneurs feeling stretched. There are so many tasks to keep on top of and fresh challenges emerging that it can be difficult to make time to analyse your financial health. However, making sure you understand the areas of the company that are bringing in money and where losses are being made is pivotal to your success.
Be sure to review your profits, losses and cash flow statements on a regular basis. It’s imperative that you have ample revenue coming in to cover your various costs each month. You’ll also need to keep an eye out for figures that are continually increasing – whether they relate to profit or loss.
Ensuring that you’re aware of what money is arriving and departing the company bank accounts enables you to correct any missteps, make more informed financial decisions, and ensure that you’re operating with enough of a monetary cushion should a setback occur.
Failing to offer consistency
It’s vital that you use the early stages of your business’ lifecycle to establish a level of branding that will ultimately become instantly recognisable to customers. Their perception of your brand will be shaped by a range of factors like marketing, customer service, and, significantly, the quality of your products and services.
Positive customer reviews are like gold dust to startups, and it’s vital that you ensure that your products are of sufficient quality to lead to high user ratings.
Your early products will set the standard for your future releases, so it’s important that you start as you mean to go on when it comes to quality. Of course, building high-quality products is generally a good thing for businesses, but not if your customers associate your company with affordable, low-quality goods after your previous products.
Offering consistency in the type of products or services you produce helps to make your startup more recognisable for customers and helps them to understand what they’re getting for their money. Try not to fluctuate on the quality of your output too much or else you risk alienating customers and losing their trust in your goods.
For many entrepreneurs, their startup is their entire world. It’s something to take pride in and nurture regularly. While it’s definitely exciting to have a business that you can call your own, it’s important to avoid letting the excitement get the better of you.
Some startup owners find themselves guilty of getting carried away with their investments, and pump too much money into scaling their business before its ready. Yes, building a state-of-the-art office interior with a dozen Apple Macs is sure to make a great first impression, but it’s not going to help your balance sheets when you’re not ready to make the leap into having your own office space.
There are plenty of hidden costs associated with investing in larger office spaces and technology – including IT licences, hiring support, creating an infrastructure that keeps everyone online to name but a few.
It can be tempting to pump money into your company to make it look like an impressive enterprise, but make sure every decision you take is fully costed and weighed up in a balanced manner. Entrepreneurs never know when the next rainy day will come, so it’s best to hold on to your finances and expand only when you’re fully ready.
Controlling your ambition
Likewise, it’s important that you control your ambitions accordingly. There’s no such thing as perfection and no business is entirely risk-free.
There will be times when your startup fails to meet its targets (if it’s always meeting them then it’s time to raise your expectations), and as an entrepreneur, the emphasis will be on you to steer the company away from its shortcomings.
If you were aiming to be listed on the FTSE 100 after a few years of trading, this can be entirely counter-productive to your scaling efforts. Likewise, if you’re just happy to be in operation while customers are queuing up at your front door then it’s time to reassess your ambitions.
Here, it pays to take more time to look at your numbers. Profit margins are great ways of charting whether your company is over or underperforming. Be sure to use all the information available to you as a way of ensuring that your ambitions are in line with the growth of your company.
Businessmen tend to fall into two categories. Some are visionaries that are wholly intent on building their dreams into a reality and crafting a responsive and happy ecosystem that cares for customers. While others are more intent on building a business from an initially good idea with the primary aim of selling up and moving on to the next endeavour as soon as the time’s right.
Of course, there’s no right or wrong way to manage a company, and the short-term approach can be hugely profitable for entrepreneurs who are capable of managing a company with the future in mind – even if they won’t be at the helm when the future arrives. However, short-termism needs to be regarded as a pitfall because it can undermine an entire operation.
The key issue is that short-term entrepreneurs can sometimes find themselves guilty of negligence. If you’re building a company that you can’t see yourself managing in five years’ time, why bother keeping track of the little stuff?
If you’re looking to build a good idea into a profitable business that will eventually be bought out, make sure you stay committed to the cause every step of the way. Too many oversights will ultimately undermine your entire model.