The creation of a business can be extremely risky, no matter the industry or the entrepreneur. Nearly 50% of companies go out of business within three years of existence. To go surpass this 3-year mark and thrive, it is necessary to implement proper procedures when initially forming your business. Listed below are some common mistakes made by startups that ultimately contribute to their failure.
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Start with inadequate financial resources
Entrepreneurs often neglect to adequately plan their finances in order to minimize the amount of capital needed to start their business. The result of this? Inadequate funding for goals and the lack of cash reserved for unexpected situations and emergencies.
To avoid these issues, take care to prepare financial projections for your new business, particularly for the first 12 months. These can also help with obtaining financing and investments.
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Neglecting to write a business plan
Many novice entrepreneurs do not prepare a proper business plan. This document does not need to belong and detailed; however, taking the time to develop a solid plan will allow you to be consistent in your efforts, serve as a rallying point for your team, and facilitate setting deadlines for measuring your progress.
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Neglecting to track progress and adjust the shot
Do not make the mistake of only saving your business plan on a tablet. Create a dynamic document by constantly monitoring your progress and keeping it current.
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Buy assets with cash
The use of operating funds to secure long-term assets is a common mistake that can lead to a lack of liquidity. When evaluating your purchases of equipment, machinery, or computer services, consider using a commercial loan with a repayment period that corresponds to the life of the asset (for example, a seven-year loan for a vehicle you want to use for seven years).
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Avoid asking for outside help
Many new entrepreneurs avoid asking for help, even when they desperately need it. Get advice from a mentor, hire an outside consultant, or create an advisory committee to gain support and ideas.
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Set a bad price
Do not make the mistake of setting your prices only according to those of your competitors. In order to make an informed decision, it is important to perform a detailed cost search for each of your products. You must also routinely monitor your costs so that you can make the necessary adjustments.
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Neglecting technology
Canadian companies are investing less in technology than US companies, and that affects our overall productivity. Be sure to evaluate how technology could be beneficial for your business’s growth, efficiency, and profitability.
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Neglecting Online Marketing
Take care to evaluate how you can take advantage of internet marketing. For example, ads on social media platforms can be a more affordable way to effectively target specific segments of the market.
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Do not learn from your mistakes
When starting your business, learn from your mistakes and use them as a guide to success. Remember that many successful entrepreneurs failed on their first try. What is important is to come back stronger after understanding what did not work.
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To choose wrong partners
As the saying goes, it is better to be alone than badly accompanied. This applies perfectly when first creating your business. It is true that having a partner in launch can be reassuring; however, a bad association can completely harm the development of the company and its’ future. It goes without saying that it is not uncommon to see associates turn into enemies. This often occurs when their respective tasks have not been carefully defined from the beginning of the venture.
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