With so many moving parts to consider it is important take steps to ensure you don’t make mistakes that slow your progress, come back to haunt you later down the line or get you in hot water with HMRC.
At Blu Sky, one of our areas of expertise is start-ups and supporting them throughout their business journey.
Over the years we’ve worked with hundreds of start-ups, so we’ve seen it all. To help you out, we’re sharing 11 common mistakes and how to avoid them.
Mistake 1: Not Starting with the end in mind
Focussing only on the short term can mean you miss the important steps you need to get your business off the ground, and it can really hinder your overall growth.
A great way to avoid short-sightedness is to dedicate some time thinking about where you want to end up. Ask yourself:
- What do I want to achieve?
- How long will I be involved in this business?
- When will I exit?
Don’t get carried away trying to do it all at once. Take it one day at a time. Consider implementing relevant systems and processes now to help you reach your goals.
Mistake 2: Not completing market research
Market research is there to help you understand your customers wants and needs. If you conduct thorough research, you can make the needed small changes early to avoid bigger problems down the line.
Make sure you ask a diverse and impartial group for their support when conducting research. Keep in mind that your parents and your best friends may want to spare your feelings so may not be the best people to canvas.
Mistake 3: You don’t have a USP or the market is overcrowded
Founders often believe they have an idea they can monetise because they personally like it, so they dive in headfirst without a USP or understanding of current markets. In this scenario, of course you’ll see your idea succeeding because it’s something you’d personally spend money on. Remember it’s not whether you like it or not, it’s whether your potential customers will.
An old friend of ours once said “you may like sunglasses, but it’s raining so sell umbrellas”. As we’ve said in the previous point, do your market research, but also consider your potential competitors and definitely ensure you have a USP and/or a gap in the market.
Mistake 4: Not vetting your co-founder, partner or investors
We have seen too many ‘partnerships’ grind to a halt because co-founders disagree on direction, remuneration, time off, evolving responsibilities and so on. If you can’t agree with each other or find common ground, you’re not going to get very far.
Make sure you do your due diligence with team members, especially co-founders, partners and investors. You need to have shared values, work ethics and a vision of where you want your business to go.
Even when you have common ground and shared outlooks, it’s not always going to be smooth sailing, it’s likely that you’ll clash and it can often happen with decisions and job roles. To help tackle this, you could try an accountability chart to ensure everyone knows who is responsible for what.
It’s also important to discuss and map out what will happen if someone wants out, gets ill or wants to change job role. It’s easier to have these conversations early on and remember to keep it fair. As a side note, “fair” doesn’t look the same to everyone, so make sure you discuss that too.
Mistake 5: Letting a setback, set you back
Setbacks are a natural part of the rocky road to success. When things go wrong, take a step back and look at the whole picture, don’t sulk and allow yourself to get stuck in a negative spiral. Evaluate what happened and learn from your mistakes. Don’t go into denial about the cause of the problem, and never be afraid to ask for help when you need it.
Mistake 6: Not nurturing the talent you have
Failure to nurture your team will result in a constant recruitment cycle which can be detrimental to your business. Remember your team are your greatest asset. Listen to their ideas, give them purpose, the opportunity to progress and set clear goals and objectives. You need them to make and contribute to the culture, whilst feeling like a valued and needed part of the team.
Mistake 7: Being disorganised and reactive
A lack of process or, just as commonly, a lack of management and enforcement of process can wreak havoc. Your problems will be further accelerated if you simply react without taking the bigger picture into consideration.
Complete lack of organisation and quick reactions to problems, can result in financial skeletons in the closet such as missed payments, outstanding balances with HMRC and missed filing deadlines. Ultimately this will impact the efficiency of your business and its potential value.
Stay on top of your admin, organise your finances and other business processes. Don’t dismiss necessary administration as boring, maybe it is, but where legalities are attached, boring is where you need it to be. Set up systems so things are not missed, or even better, hire someone to do this for you.
Mistake 8: Trying to do everything yourself
You don’t have to try and do it all alone and it’s highly likely that you can in all honesty. Get support, set up processes for areas you are weaker on and focus on what you do best.
Mistake 9: No anticipating cashflow problems
Poorly managed cash and lack of forecasting is a classic business killer. Build a formidable cashflow forecast to ensure you are in control of the numbers. Cashflows are often associated with raising finance, but they need to be a living, breathing part of your business journey. A decent, well managed cashflow forecast will give you the breathing space to identify potential future issues and respond accordingly.
Mistake 10: Misunderstanding the link between state aid funding/grants and R&D
Jumping into state aid funding today without assessing the impacts on R&D Tax Credits can cost you cash. Speak to a qualified advisor to understand the best strategy to ensure you can get the most benefit. It’s important to assess whether a grant is state aid, the impact on cashflow and other commercial and taxation factors.
Mistake 11: Making big purchases once you’ve secured funding
Understandably, you want the best products and most talented staff when building the business up. However, this can easily result in overspending. Decide what start-up costs are needed to run the business and cut out all non-essential spending. This will allow your business to grow much faster and it’ll leave more cash to make those big purchases, if you still need them, later down the line.
Need help?
Making mistakes is part of life, but hopefully our tips can give you plenty to think about and help minimise their effect. Please feel free to get in touch if you would like to discuss anything further.
