As a start-up, you have your work cut out for you.
Having a great business idea is only a fraction of the battle. You must then learn how to build a company and help it grow. The good news is that the worst of the most common start-up mistakes are simple to avoid when you know what to look for.
Growing Too Quickly
It’s understandable that a new business wants to grow as quickly as possible. Unfortunately, this isn’t always best for the long-term sustainability of a company. For example, a company selling a product may learn that they can get a discount if they order more merchandise produced at one time. They may think that their business is growing, so it makes sense to have as much product on hand as possible. The reality can be much different.
In some cases, a company can spend all their liquid assets on inventory and be left without the necessary budget to move that inventory. They may not have money for advertising, they may not be able to pay their suppliers, or they may not be able to pay to keep the lights on in their warehouse. While it can be tempting to get as much inventory as possible, be realistic about the current growth of your company.
Growing Too Slowly
Yes, growth can be a double edged source. Using the same example as above, a company can get into a situation where they use their entire budget on advertising – and it works! This should be a cause for celebration, but if there isn’t enough inventory to fulfill the order, then customers could have a long wait. This will create the opposite of goodwill with some, while others will simply cancel their order. The moral of both stories? Be realistic about your growth and don’t put all your eggs in one basket – spread them out from basket to basket.
Pinching Pennies When it Makes Sense to Spend Them
It’s understandable that a company wants to be careful with their expenditures in their first few months or years of business – and it’s wise to do so. However, there are some cases where spending a little can reap bigger rewards. A perfect example is internet service. Many start-ups don’t think about just how important the right provider and level of service is, but when your customers are ordering and you can’t get online to print out packing slips, you’ll wish you had fiber optic Ethernet.
The bottom line of any start-up business is that you must look at both the short and long term. Yes, it’s great to have a business plan and business goals, but if you only look at your long-term options, you’ll miss what needs to be done today. Likewise, if you focus so much on what you need to do today that you forget about the path in front of you, you could end up doing more harm than good.