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Mistakes will be made. That’s inevitable for any new venture. But there are mistakes that cause a slight setback, and then there are mistakes that set your business on a collision course. Ninety percent of new companies fail. That’s a sobering statistic, so try and keep your screwups to a minimum by learning from the mistakes that other new companies have made. You’ll probably still commit some blunders of your own, but if you avoid these major missteps, you’ll be on more solid footing.
1. You don’t trust your employees.
When you don’t trust your staff to do their jobs efficiently and effectively, you micromanage. And when you micromanage, you alienate your staff. And when you alienate your staff, pretty soon they quit and you’re in an even bigger mess. To avoid this situation, be thoughtful and deliberate about the hiring process. After all, 23 percent of new companies fail because they don’t have the right team. Hire the best people you can, and once you bring them on, give them the autonomy to do their jobs. When you hire solid, qualified people and then exhibit your confidence in them, they do better work than if you’re constantly looking over their shoulders.
2. You don’t fully understand the industry.
Just about every veteran wedding planner can tell you about a former brides who so enjoyed the process of planning her wedding that she wanted to start her own business. Little did she know that getting married doesn’t make you a wedding planning expert. The same can be said for any entrepreneur who decides to set up shop in a particular industry before gaining a thorough understanding of and respect for the business at hand. Before you start a business in an unfamiliar industry, you need to educate yourself. Talk to experts and trusted advisers, and develop a thorough understanding of the industry before moving forward, because it’s not the kind of situation where it’s acceptable to learn on the job.
3. You make a product no one wants.
The biggest reason why startups fail is perhaps the most obvious: No one is buying what you’re selling. Lack of market need is the downfall of 42 percent of unsuccessful businesses. So even if your product is an idea born out of your personal need for such an item or service, don’t assume others share that necessity. Or, they might want the product, but not at the price you’re offering it. Do research to find out if the market is saturated, or if there’s even a need for the product. And don’t be so committed to an idea that you can’t let it go when it becomes clear that the chances of success are slim.
4. You expand too quickly
In the early stages of your business, especially when you’re starting to gain attention and traction, it can be tempting to start moving forward at full speed. But that’s the worst thing you can do. Don’t hire until you find the right people and absolutely need them, and resist the urge to spend even if you have the funding. Be patient, even if you feel like your competitors are zooming ahead. Because in six months or a year, they could be out of business after making rash decisions, whereas you’ll be in a more stable position because you made decisions that were right for your company.