In the 21st century, millennials have been more and more inspired to build their own startups. Entrepreneurship has become the cool and trendy topic of this age.
The problem, though, is that most startups fail within three years. So, why are so many startups failing? The truth is that most startups overlook a lot of things as they expand their business, which usually leads to their demise.
Here are eight things that most startups overlook when trying to expand and grow their business.
1. The Right Employees
There is nothing more important than the people on your team. Business is a team sport, after all. If you don’t have the right players on your team, you won’t be making it to the playoffs.
“One of the things I overlooked was how important it was to hire the right people. Several times, we kept people around too long that weren’t contributing to the business.
We were much happier when we got the right people on the bus and the wrong people off. It helps set a precedent for a good company culture.” – Marcin Kleczynski, founder and CEO of Malwarebytes.
2. Market Research
Remember your parents telling you to do your homework? It was and still is good advice, especially in the business world.
If you dive in without doing your due diligence, you can lose a lot of money or maybe even all of it.
“If your business is not competitive in your home country, problems will be magnified in all other countries. Start by visiting local retailers and watch consumers. We continually improve by honing in on the local shopping preferences.” – Philip Rooke, CEO of Spreadshirt.
3. Company Culture
Employees are attracted to companies that have a culture. It is a way for them to identify whether they will be a good fit for the company.
The quality of culture will positively or negatively affect employee retention.
“The main thing that we didn’t want to overlook is our company culture as we grew. Our strategy to not overlook this very important matter was to implement an organizational structure, we call Entrepreneur-ocracy.
It is a corporate structure with no managers and allow employees to make critical decisions because they are empowered to do so.
Instead of managers, we have weekly team meetings that are overseen by elected moderators. By allowing managerial duties to be divided among the team members, we are on pace to save $1+ million dollars in operational expenses this year.” -Jessica Mah, CEO of inDinero.
4. Hiring The Services of Appropriate Professionals
Sometimes, startup employees will try to save money by giving more of their time to do other things. However, there are certain matters that should be left to the professionals.
“The most important thing that we overlooked was to get people that were competent in doing what they do best, specifically a CPA. I wish we hadn’t tried to do it ourselves. All we ended up doing was wasting time.
It would have taken 20 minutes for a CPA to do it. Yet, it took us 4 hours and we still weren’t doing it correctly. My advice is to reach out and ask other entrepreneurs for recommendations”, says Kim Kaupe (Co-Founder of Zinepak).
5. Internal Communication
Nothing is more important than ensuring that everyone is on the same page. Miscommunication can cost the company a great loss of time and even millions of dollars.
“We’ve been around since 2001 and still learning how to be a global institution. The one thing that we overlooked is keeping internal communication open, clear, and flowing.
With an international organization, there are time differences and it’s really easy for people to feel disconnected. I would suggest establishing a monthly meeting for everyone to connect.” – Herman Heller, CEO of Runbook International.
6. A Contingency Plan
Most of us have been told to have a backup plan. That advice is even more pertinent in business.
If you are an expanding company, you are very likely to run out of money. You will need a contingency financing plan so you’ll know what to do if things cost more or take longer than expected.
“Being in danger of running out of money can cause huge morale problems and a big increase in employee stress.” – Ray Rothrock, CEO of Red Seal.
7. Seasoned Leadership
Everybody can’t be Lebron James. However, it will help your business greatly to have such a person with those qualities.
“A successful startup cannot overlook the importance of having experienced leaders. Leaders who have experienced the full trajectory of a startup’s lifecycle, from garage to public trading and beyond.
The seasoned leader can increase sales, anticipate common pitfalls, and establish the startup’s culture as it expands beyond its initial creators.” – Vick Vaishnavi, CEO of Yottaa.
8. Sharing The Wealth
In this age, hourly wages are not enough anymore. Unless you are paying them an above average wage, you are going to need to offer some other incentives to keep them loyal to your company.
“Simply hiring people at minimum wage won’t keep loyal employees. It is important to incentivize your employees, giving them ownership in the vision.
When we began expanding, we hired people who were overqualified and asked them to learn the business for $10 an hour. Our incentive was to give them the opportunity to become owner operators if they stayed loyal to us.
Now, those committed employees are also stakeholders of the company.” – Justin Wetherill, CEO of uBreakiFix.
Featured photo credit: Mac (by Financial Times) via imcreator.com