Today, the promise of technology lures many inventors to launch promising startups. While this trend bodes well for the future, some talented individuals sometimes overlook basic steps that help promote success. Avoid these six common mistakes to improve your venture’s prospects:
One widespread catastrophe confronting startup founders in large numbers involves an over-reliance on similar management skills. Some authorities caution that every new company requires two separate types of leadership qualities: invention and entrepreneurship. The former talent helps the company devise novel contributions and original ideas, while the latter ability ensures that the firm will seize business opportunities to generate profits. Some startup founders possess both traits. However, if you find yourself lacking in one area, it makes sense to seek out a partner capable of filling the gap.
Another common hazard concerns unrealistic or overblown valuations. Many Silicon Valley startups raise money from angel investors by shamelessly promoting their innovations as world-shaking. Yet, possessing the discipline to research the marketplace realistically at the outset may save disappointment later. Sometimes startups don’t live up to their potential because they discount current consumer trends or concerns. An overly optimistic evaluation of the company’s prospects may result in significant debts and overblown valuations unless investors and founders temper optimism with a healthy dose of realism.
Bruce Philp points to another disturbing mistake that sometimes limits startups. Today, “growth hacking” by relying on technology to sell goods and services cost-effectively sometimes delays the development of reliable marketing departments. The Internet does offer a great way to share information about a new company’s products, however, don’t depend on email campaigns or a nice website alone to accomplish effective CRM. Even trendy technology won’t produce the enduring name recognition of a well-honed sales department in certain situations. By investing in recruiting, training and promoting capable sales people, the firm can expect future steady long-term growth.
Numerous experts also point to postponing obtaining insurance as a critical failure on the part of startup management teams. While using limited resources for other purposes may prove tempting, managers need to remember that a single catastrophe holds the potential to wipe out a firm or a brand before it achieves acceptance. In fact, the business must obtain certain types of insurance coverage right from the outset in order to function. Every state requires employers to furnish workers compensation, so even young companies need to budget payments to state pools designed to cover these types of payments once they begin hiring regular employees. A startup may delay this process through careful structuring, but cannot do so indefinitely without risking fines and other costly consequences. Similarly, obtaining basic insurance coverage for costs such as general liability, and auto and casualty losses may help keep a startup functioning despite accidents, or unexpected lawsuits.
A fifth type of serious threat to a young firm pertains to the extent of insurance coverage. For long term success, consider beginning your venture with sufficient funds to also purchase life and disability coverage for all staff members, as well as an umbrella policy that adds protection to existing policies. As a precaution against unforeseen delays that can cripple ventures, such as the unexpected loss of a “key person” or the untimely retirement of a co-founder, adding business interruption coverage may help save money in the long run too. Startups that take an interest in supplying life and disability coverage in some locations possess an advantage when seeking bank loans, so this form of protection may offer a silver lining to cash-strapped young enterprises. Trying to protect at least 60 per cent to 70 per cent of average earned income in a disability situation remains a prudent course of action.
Today, obtaining a range of online insurance quotes expedites the process of locating cost-effective coverage for many entrepreneurs. This resource will often yield some excellent bargains.
However, gaining business insurance quotes online does require self-disciplined follow-up. Managers should carefully evaluate insurance companies and available policies in order to obtain the best package. Both the inventor and the entrepreneur on the management team can offer useful perspectives during this process. A very creative founder and a business-savvy founder who work well together will jointly contribute input that may prove helpful in isolating desired coverage issues. Solid insurance coverage assists the startup during the sensitive time period until a fully trained sales force enhances brand recognition.