Source | Entrepreneur : Matt Sweetwood
So, you have a great new idea or invention, and you are ready to open your startup business. But, you’ve been scared by the well-publicized statistic about startup failure — more than 50 percent of small businesses fail in the first four years.
Opening and operating a successful startup requires some luck hard-work and thoughtful planning — as well as the ability to adapt that plan. Having been involved as a consultant to numerous startups over the past decade, I have seen some fail, some achieve a modicum of success, and some make it big. Here are a few do’s and don’ts that will help guide your startup to the promised land:
- Don’t think that a great idea or a great product is enough. The startup graveyard is littered with amazing ideas and products that have failed.
- Do have a business plan that includes every aspect of how you will run your operation and how it will be successful. It should include all anticipated costs, marketing, manufacturing, the technology required and staffing. A business plan should also include how you will market and sell your product.
- Don’t think your idea or product is original and because you and your friends think it’s amazing, means that it is and there’s a market for it.
- Do lots of research before you spend your money. As a consultant, I have on three separate occasions been asked to help with a business plan for a startup, where I discovered almost exactly what they are doing has been tried before and failed. In two of those instances, the previous failures indicated that the idea wasn’t good. In the third instance, we were able to learn from the previous mistakes and actually make a successful run at it. The number one reason startups fail is that there is no market for their offering.
- Don’t assume you will get financing other than the money you start with from yourself, family and friends. Only a very small percentage of startups get Venture Capital (VC) funding and in fact, the funding bubble has burst. And that means early-stage startups are getting little or no love from outside equity firms.
- Do assume the initial funding you have will be all you get, so the goal is to have the lowest burn rate possible. Therefore, your initial business plan should have a route to profitability and sustainability before the money runs out. The number two reason startups fail is that they run out of money.