By Michael Jacobsen ( Digital Marketing Expert From Toronto)
During my career I have had the honour of working with several different startup companies. A few of them have gone on to become very successful. However the majority of the startups that I have worked with in the past have failed miserably. As a result of that, my resume looks more like a graveyard of failures than a list of accomplishments. However I do not consider that my experience with these startups is like a barren graveyard because I have acquired invaluable knowledge from these failed companies on why they failed and have found that there are common factors. I have found that other companies’ failures can provide great lessons for newly forming startups to succeed. This is very important because 99 % of startup businesses fail within the first year. Therefore if you know why they failed then perhaps you can better prepare your company to succeed. Based on my experience with failed startups here are the top 5 mistakes that can kill your startup:
- STARTING OFF LARGE TO MAKE IT LOOK LIKE YOU ARE IN CHARGE
The first mistake that I have seen many owners do repetitively is that they want to start off at the top, completely bypassing the growing curve. They want instant results and they want to get rich quick. They do not want to start small and work their way up. Instead they want to throw it all out and grow very quickly. One of the owners that I worked for threw a massive party at an expensive popular nightclub before his product was even officially launched. Half the people invited to this party were not even our target audience. Having a launching party at this popular nightclub would have been great for exposure with the right audience, but that audience was not there. The owner spent a lot of money just to show off and have a good time. But it was a waste of money for the company and it basically accomplished nothing. I have also seen owners spend a great deal of money on a ridiculous amount of inventory, even though I knew that it would be nearly impossible to sell all of it in the first year. People need to learn that startups go through growth curves and you cannot rush it. You cannot start at the top of the curve. You must be patient with it. Usually this starting off large and in charge strategy causes a great deal of expenses and cuts which results in failure.
- NOT TRULY UNDERSTANDING YOUR AUDIENCE
This mistake is a major one. I have seen several owners literally create marketing campaigns based on what appeals to them alone with no considerations for an audience. It is extremely important to remember that your company is not about you. It is about the people you are selling to. The messages that you communicate must be the ones that these targeted audiences understand. I have worked with owners who have told me who the target audiences are and then they message the marketing in such a way that it goes against them. In addition, I have also worked with owners who want to target everyone. This strategy failed because they spread themselves too thin. Therefore it is important that before you do any marketing, you must decide and research who your customers will be. If you do not do this, you will fail.
- BELIEVING YOUR PRODUCT IS THE BEST AND EVERYONE ELSE IS WRONG
In my experiences I have seen that many owners and business people fail to see the faults in their company. They are blind to them. Why? Well, many of them like to think that their company is the best and has no flaws. According to them it is perfectly designed. They put their egos into the business and refuse to think of any weaknesses. I once worked with an owner that claimed to be a business guru and that he always was a success. He taught business to other people and wrote several books about businesses for other people. This person literally listened to no one but himself. He was the self-proclaimed expert. When the startup first started, people within the company and outside of it would tell him that he was doing something wrong with the company but he refused to listen. When the company was in its final failed stage, we all knew that the owner was wrong. Therefore it is very important that as an owner you must listen to others about your company and seriously look for weaknesses in your company. No company is perfect and yours is no exception.
- HIRING CHEAP LABOUR
Because your company is a startup and money might be tight at the beginning, you may be considering hiring cheap labour or getting volunteers/interns to work for your company. Just remember the great quote by Red Adair that states, “If you think it’s expensive to hire a professional to do the job, wait until you hire an amateur.” This quote is very true. I have seen startup companies hire a large work force of cheap labour, instead of hiring one or two professionals. Unfortunately for these companies the scene became very ugly. Therefore it is very important to remember that if you want to make sure that you start your company off on the right foot get the right people for the job. Make sure that these people have the needed experience in the specific field that you want them to have and that they are not just interns or volunteers. Too many companies will go the volunteer route because it is much cheaper but in reality it does not help your business and will probably result in failure. Therefore you want to make sure that you hire at least one qualified experienced expert when you begin your startup.
- NOT DOING YOUR HOMEWORK
Another extremely point for you to remember is that knowledge is power and power will help keep your business going. An idea is great for a startup, but if you do not have any knowledge or information about what your business and environment will look like, you are just going to be throwing stuff around until it sticks. Not doing research prior to starting up your company will cost you a great deal of time and money, and will probably result in failure. I worked once with an owner who did not know the exact population of the city that he was going after in his target audience. He had overestimated it by several millions. I have also seen companies that have had unrealistic crazy projections on how their businesses were going to grow. Their numbers were based on best case scenarios without looking at worst case ones. Therefore if you want to succeed with your startup, you have to be realistic when doing your homework and do your research wisely.
Avoid these top 5 mistakes with your startup and you will have an excellent chance of being in the 1% group that succeeds.
- Michael Jacobsen is a Digital Marketing Expert from Toronto. For more information or questions that you may have about this blog or Digital Marketing, please contact Michael at email@example.com or on Twitter @marketing_mbj.