Start-Up Mistakes to Lookout For!

Let's face it, every entrepreneur's first start-up is a fish-out-of-water- experience; new territories usually are. One of the best ways to tackle the unfamiliarity of business ownership however is to learn from those who have gone before you. Most entrepreneurs have a laundry list of things they've had to do, and redo multiple times before getting things right. Fortunately, we've got our laundry list of mistakes you should avoid to make your startup success attainable.

A Saturated Market

One of the more challenging tasks of being an entrepreneur is knowing how to reason with yourself and be honest in those responses. This is particularly true at the conception stage of your startup. You come up with an idea for your business, you believe in it, and you start investing time, energy, and resources to make your vision materialize. Finally, when you launch, you realize that the market is too saturated and your attempt to transcend your peers failed. Just like that, your business dissolves. Unfortunately, this is a common mistake.

When you have an idea for a startup, it is imperative to implement a market research component that facilitates your place in the designated industry. If you haven't invented something it is more than likely the case that your business idea already exists. Know who your competitors are, how the market is performing, and whether it makes sense to invest in a business idea that has seen one too many launches.

Launching too quickly or too slowly

 

Having a new business can be exciting and that excitement can persuade you to place your product or service in the hands of consumers as fast as possible. Prematurely launching your business can kill it. There is nothing quite like introducing an ill-prepared product to a consumer. On the other hand, it is equally detrimental if you have a successful product and you are unable to keep up with the demand for it. Take some time and nurture your idea to control for foreseeable outcomes like these.

It is also possible to launch too slowly. Some startups require a large amount of preparation time. Research, testing, and funding are among the primary factors that can delay a launch. However, if you are taking too long to make your business accessible, perhaps it has no place in the market. Otherwise, you're hurting your business if you withhold something that is on demand and is necessary to your consumers. They may stop waiting. If you are slow to launch, there should be substantial reason.

Poor Investment Strategy

Every business wants to grow, but that growth is heavily predicated on how money is managed. Your business should be your investment manager's priority. Monitor the monetary flow and forecast of your startup to effectively regulate where you can make more money and where you should pull back a bit. Further, investments should yield growth and this should not be interpreted as investing solely in the interest of shareholders. Investments should also be made in favour of consumers; they make the business. “If you invest in your users, your investors will benefit regardless”.

No Target Audience

It's unfortunate that some startups fail due to the lack of a clear and definitive consumer. Knowing who you are selling your product to is instrumental in startup success. A designated target audience helps drive marketing and promotion strategies, product development, and sale projection. When you have a target audience you are aware of exactly where to find your market and how to control it and be competitive. On the other hand, failure to determine a specific group to which to market your product can result in financial loss and over-investment.

A Divided Team

Lastly, if your team does not share your vision, you are doing a disservice to your business. Hire like-minded people who share your values, but differ in creativity and skill; this will diversify and enhance your business potential.

Starting a business can be intimidating, but minimizing your mistakes can make the ride a little less bumpy and a little more successful. 

The Opportunity of a Low Loonie

If you’ve been following Canadian financial news lately, you’ll appreciate that the loonie has been slumping against the greenback. In mid-July, our currency fell to 77 cents U.S., its lowest level since 2009. A number of factors are contributing to this decline, but perhaps the most important is long-term weakness in certain commodities, especially crude oil.

Canada’s economy relies on the extraction of raw materials more than most others in the industrialized world. A slump in commodity prices diminishes the incentive for investment in those sectors from abroad, reducing demand for our currency. The sluggishness of the loonie also explains why we’ve seen a small pick-up in inflation across the country since June, even though Canada is in an economic downturn, the price of oil is still relatively low, and the Harper government has promised to balance its budget despite the slump (all of which tend to put a damper on inflation). A low loonie means that the price of imports into our country, including many food products and manufactures, has risen.

But as you may have inferred from the title of this post, there is good news too: namely, the returns on our exports will also tend to rise, since those exports will become less expensive (and thus more attractive) to foreign customers. Tourism and associated industries may also see fringe benefits, as the prospect of a Canadian vacation becomes more affordable to foreign travelers. In other words, a low loonie translates into business opportunities abroad. If you haven’t done so already, now is a great time to concentrate on online marketing and distribution to foreign markets, particularly the U.S., China, Brazil, Germany, and Australia.

As with any new market, do your homework first.

Is there a demand for your product or service, or an unfulfilled need that you can help to satisfy? Are prospective customers with disposable income willing to shell out for whatever you have to offer? What do you bring to the table that incumbent firms do not?

Before you embark on a venture into overseas markets, you should be able to answer these questions definitively. Getting there simply requires due diligence. Start with some research on the internet, and identify organizations that can help you glean insight into the target market, including government data on income levels and spending habits. Aim to picture your typical client in the target market, the environment in which s/he lives and works, the amount of free time s/he has, and the recreational activities s/he enjoys.

Connect with foreign customers online.

Although overseas branches are nice to have, they’re also a luxury that most small and medium-sized firms don’t enjoy. This is where a robust online presence, including a website accessible in multiple languages, comes in handy. If you don’t have the budget to invest in a sleek, sophisticated website, there’s also a variety of existing online gateways—including eBay and other auction sites—that allow you to 1) broaden your international reach on a budget and 2) dip your toe into the waters of your target market before your dive in.

As the internet increasingly evolves from a stationary, plugged-in medium to a mobile, wireless one, more and more industries are prioritizing compatibility with mobile devices in their website design strategy. You’d be well advised to follow suit as you strive to reach foreign customers.

Choose distributors and payment processors wisely.

Select the most reputable, reliable distributor and most secure international payments system you can find. (Favour dependability even if the price is slightly higher, and investigate the record of candidate distributors and payments processors well in advance.) If customers know they can count on these aspects of your business, they’ll keep coming back, and recommend your company to their friends and associates. But if something goes wrong, even if a subcontractor is to blame, your business’ reputation could be in jeopardy.

For more on how you can take advantage of a feeble loonie, see this piece in the Globe and Mail’s business section by e-commerce expert Cameron Schmidt.           

4 Tips for Startup Founders

The best business advice often comes from those entrepreneurs who have "been there and done that." Here are 4 tips for startup founders from startup founders:

Don't rush your product to market.

"It’s natural to be in a hurry to get product out the door, but take a breath first and really gauge where you are. Slow down when it comes to key decisions, said Dan Belcher, co-founder of Boston-based Stackdriver. Sometimes doing things too early is just as bad than doing them too late.

Do all the jobs first.

Think of this as the "Undercover Boss" paradigm. On that popular reality show, a CEO puts on a disguise and goes down to join the workers to get their perspective on things. Perhaps you should give this a try. "Founders should do every role first before hiring someone to take it over. This helps me understand who I’m hiring, what they should be good at, what they should be doing and how to measure their success,” said David Mytton, founder of Server Density which is a London-based provider of server monitoring services.

Be smart with your hiring.

This is solid advice because hiring before there is a demand for your product is a good way to run through all your working capital. That doesn't mean you shouldn't always be on the prowl for new talent. “You should always be interviewing and always be hiring regardless of your headcount plan,” says Stackdriver co-founder Izzy Azeri. “It’s so hard to find good people and the founder is always the best recruiter.”

Brace yourself for failure.

This doesn't mean you should expect that your company is going to go under but there will be times when things aren't going to work out like that should. That applies to whether you're selling shoes or developing mobile phone apps. Dan Foody is the co-founder of Cloze. They have created an app merges a user’s mail and social media messages. "Apple restricts developers to at most 100 beta test devices for any app. In today’s world that’s not nearly a large enough audience to refine an app (especially a consumer-focused one),” Foody said. “You need hundreds to thousands of beta testers. How can you avoid this pitfall? Build a web app first so you can learn the hard lessons up front with a wide audience without being restricted by platform and store limitations.”

Business Planning: An important step towards starting your business

As an entrepreneur, you juggle a lot of balls.

From managing employees, sales, financial and operations, it’s easy to get lost, trying to put out the daily fires. If you don’t take a step back and take a look around, you may have realized that your business is not what you had originally started.

This is the point when you realize you should have sat down and spent the time in creating a business plan. Not just something that you’ve jotted down in the back of an envelope, but a document that maps out your long term strategic plan for your business.

Creating a business plan is important as it not only provides you with a compass – guiding you in the right direction, but also reducing the stress and frustration in reacting to situations on a daily basis, because you know the path you are on. A business plan also allows you to:

• Be visionary –identify where you’re going and keep you on track towards your goals;

• Execute with confidence – you know what your tools and resources are going to be and can handle any potential surprises;

• Be fiscally strong – you’ve already laid the groundwork for your financial health, knowing your expenses and profit margins.

What’s a business plan?

A business plan is a document that outlines how you are going to achieve success in your business and a step by step process on how you’re going to get it done. However, you have to realize that the information that you put in your business plan depends on who your target audience is.

Here are the items you need to keep in mind when writing your business plan:

1. Know your audience

Tailor your plan to your readers’ requirements. If the plan is to raise funds, then you must indicate how your potential investor would make a return on their investment and how long it will take. However, if you are communicating your future plans for the company, then the goals of the plan are different. Always remember to tailor the material to your audience.

2. Identify your customers

Use the plan to delve deeply into outlining who your customers are. Why would they want to purchase from you. What are their pain points? How will you solve it for them? Understand the size of your potential market and how it will grow over the next 5 years. By answering these questions, you will uncover if your business is sustainable for the long-term.

3. Who are your competitors?

You also need to know the size of your competitive market - how will you differentiate yourself? What kind of challenges will you face when you go against them? It’s important to know your competitor’s strength and weaknesses so you can exploit them to your full advantage.

4. The design of your plan

If your plan is a document, make sure that your plan is easy to read, well organized and looks professional. If you are doing a PowerPoint presentation, make sure that your key points are clearly stated and easy to read.

5. What is the ROI?

Most business plans are written with the goal of raising financing. So, know your numbers! You should be aware of how much money you’ll need to raise, what your profit and operating margins are and how you’re going to make money. If you’re looking for funding from investors, then you need to communicate clearly the return of investment that they will get. How long will it take for them to make back their investment and more? What will make them confident that you will succeed in this business – so that they know they will not lose their money? They also would want to know if you are prepared for all contingencies and can protect their investment from failure.

Finally, a plan is not written in stone. Due to changing market conditions or new opportunities, you may have to react quickly and adapt. You should review your plan every quarter, just to see where you are against your milestones and address as necessary.