The symbiotic relationship between startups and entrepreneurs has been a key part of the business universe. However, startups can be one of the riskiest bets nowadays since they can become the unicorn that everyone is looking for or can go bankrupt in a very short time.
Therefore, if you are thinking about creating your own or if you have already created a startup with your dream business at the forefront, we invite you to read and analyse these points in order to avoid the common mistakes that can lead your business to bankruptcy.
1. Not Having A Specific Business Plan
Having a good idea is not synonymous with having a good product. Having a business plan involves having cold projections of what we can expect from our company in terms of revenues and profits while also clarifying how we are going to turn our idea of product or service into a profitable business. Therefore, it is super important to have a solid business plan in mind and on paper so that it can be executed perfectly to get success for your business.
2. Prioritise Friendship and Not the Talent
Startups are usually formed between friends. However, this can turn negative when one or some of the members do not add talent, creativity, and work to the project. The serious error in which these startups tend to fall is to yield to friendship over success. If your best friend does not contribute anything for the betterment of your startup, it is better than you exclude him/her to ensure the business’ growth.
3. Not Respecting Your Budget
The budget has been for decades the Achilles heel of many companies and startups are not the exception here. Spending more than you can afford is one of the most viable factors that can lead to failure. To optimise your budget, you can start in co-working spaces or adapting a space in your house or apartment. Remember that large companies were mostly formed in garages and therefore, it is not necessary to start with a bang or lavishly. Have a modest start, and that can be the key to growing your business no time at all.
4. Ensure A Strong Board in Place That Can Solve Potential Disputes
Another oversight that startups usually tend to make is when the question of board governance comes into the picture. If a startup is comprised of two to three rather young co-founders, there will come times where they will not be able to handle the disruption or navigate some serious events that take place in the company. Threats of insolvency or an exiting co-founder can definitely be the end of a startup, and this is precisely where a robust board panel shows its importance.
5. Poor Team Management and Recruitment
Another downfall where your startup is concerned can be recruiting the wrong people or hiring individuals only with the highest qualifications. It is vital to note that although the qualification of a person is an essential consideration during the recruitment process, it is not the only one. Skills play an equal role, if not more.
It is also equally imperative to find people with the right personality and attitude for your company and those who fit the objectives and vision of your company to the T. In the same vein, your management style must be such that your team performs like a well-oiled machine, taking your company to the zenith of success.
6. Legal Challenges
Finally, being legally handicapped can spell massive disaster for your startup. Owning a startup in the UK means complying with a whole list of legal norms and regulations that are integral to being a legit company. Although the legal aspect of a business is never a fun chore to deal with, not giving it its due consideration can result in a lot of sleepless nights, an unrecoverable and permanent loss of reputation as well as a tremendous financial fallout.
If you ever find yourself, as a company, on the wrong side of the law, the consequences will not be pretty. Therefore, it is a good idea to hire the right people or professionals who can take care of the legalities of your business to ensure you are always in business with a steady inflow of cash throughout the year.
The word ‘risk’ has changed the world in recent years. However, evaluating all the scenarios in favour of your startup will lead you more surely to success. It is pertinent to mention here that creating your own startup from the ground up is bound to present some serious trial and errors, but you do not have to do it all alone. Get in touch with Limelight Accountancy to get the best services you could hope for when building your business from scratch! We help new businesses get into the groove and get their accounts straightened out to ensure compliance at all ends.