You’ll never know what it’s like until you take the plunge, but you’ve heard all the clichés – “be your own boss”, “forge your own path”, or my personal favourite, “build something from the ground up”. Yet everyone seemingly forgets to tell you about those quiet nights spent staring up at the ceiling for hours on end, rolling the same question around your head, again and again: “have I made the worst decision of my life?” Overall, it’s a chaotic blur of debt, building sites filled with diggers and powered access platforms, and the occasional win that makes the whole thing worth it.
Just in case you happen to be in this very situation, we’ve put together a guide to what you need to look out for in the early stages of starting your business.
Commercial Commiserations
Most founders aren’t finance experts when they start out, so this is, perhaps unsurprisingly, where most problems can arise early on. Yes, it’s a baptism by fire for most, but here are some tips that might help prepare you.
Startup Capital
It’s highly improbable that your business will start turning a profit immediately. We’d recommend bracing for two years of lean times and taking another look at your capital projections; whatever they are, you should err on the side of caution and add up to an additional 50% as a buffer.
Poor Cash Flow Management
Most first-time entrepreneurs are learning on the job when it comes to managing a P&L, so it’s no surprise that so many overestimate sales figures and underestimate costs, leading to cash shortages early on and dialling up the pressure.
Pricing Mistakes
Startups often compete by undercutting the competition, but eventually, it’ll become clear that this isn’t sustainable. There are other ways to compete with your more established competitors, such as providing excellent customer service to capitalise on jaded consumers.
Strategic Slip-Ups
There aren’t typically many entrepreneurs who have experience leading a company. For many, it’s the reason they set up on their own in the first place, but that lack of experience can often lead to the following issues.
Business Plan
If you’ve watched enough episodes of The Apprentice or Dragons’ Den, you’ll know that there are lots of entrepreneurs with passion in spades, but simply don’t include enough detail in their business plans. If a former builder was opening a construction business, for instance, they might not even consider how they’re paying for specifics, like onsite lifts, and miss out on potential savings from scissor lift hire down the line.
Insufficient Market Research
If you’ve never validated your own business idea before, how would you know the best ways to research out of the gate? But without proper research, you might completely misjudge the size of your market and misunderstand your target market’s needs.
Poor Marketing
If you get the ball rolling before you have a marketing strategy in place, you could spend the next year playing catch-up. Even if you have the most revolutionary product in the world, it won’t sell if nobody knows it exists.
Conclusion
While the early years of a startup might be a minefield of commercial and strategic errors waiting to happen, it’s reassuring to see budding entrepreneurs everywhere taking the leap of faith. They’re opening their dream bakery, rolling the dice on their own recruitment agency, and turning side hustles into startups, because deep down, we’re all chasing something that feels a little bit like freedom.