The phenomenon of hyper-connectivity has allowed numerous potential entrepreneurs to look for ideas online, find investors from all over the world and even turn to crowdfunding. Still, even though starting an SMB or a startup is easier than it was in the past, it’s not quite easy. There are many hidden traps and hazards in the business world and the first step in avoiding them is knowing what they are in the first place. With this in mind, here are few things you didn’t know about startups that could possibly save your first attempt at success from a critical failure.
- Presentation is sometimes all that matters
Some people believe that having a great idea is the most important thing in order to start a business. Others, believe that keeping this idea a secret until you are ready is what counts the most. Nonetheless, sometimes the greatest challenge you have as a business owner lies in convincing people that you can actually pull it off. Keep in mind that when vanity strikes in, you will become extremely subjective about the ingenuity of your idea and probably won’t be able to think critically. On the other hand, seeing how potential investors have to deal with ecstatic future entrepreneurs all the time they might enter with not a small amount of skepticism.
To cut long story short, having a great idea is not enough on its own. You also need to learn how to make a good presentation out of it. First of all, you need to keep in mind that people you are talking to are bound to pay attention to your non-verbal communication as much as they will listen to you. This is why you need to preoccupy them with as many visual items (videos, graphs, infographics) and try to appear as calm and self-assured as possible. Next, you need to have a great plan that starts from day one and learn how to negotiate a term sheet offer. Of course, these all are just a tip of the iceberg and there are many other skills you must master in order to get what you want.
- The lack of reputation can be devastating
Another thing you need to keep in mind is that a lack of reputation isn’t a neutral, but a bad thing. Sure, it goes without saying that it is not nearly as bad as having a negative reputation caused by being entangled in a major niche scandal but still it is not where you want to be. You see, most business relationships rely on trust and not knowing anything about your company means that they won’t be willing and ready to do business with you.
Because of this, you need to find a way to win them over either by a limited time offer or a referral program. Furthermore, offering any kind of guarantee that you will get the job done might put their mind at ease and help them in trusting you. For instance, you could include a performance bond in the deal and in this way guarantee that the job will be done exactly as specified in the contract. This is especially useful for the most valuable contracts out there, seeing how it will protect the investment of the other party enough to make them comfortable entrusting huge amounts of money to an obscure business.
- Startups fail all the time
One of the most important startup lessons, and the one that is by far the hardest to learn is a fact that startups fail all the time. No, this is not an exaggeration; you see 95 percent of all startups eventually result in failure due to various miscalculations or mismanagement issues. Sometimes, the idea will be great but the market won’t exist or be able to recognize it in time. In other situations, it will be too similar to an already existing brand and your audience won’t be able to tell why your product/service is superior. Needless to say, even the names such as Henry Ford and Walt Disney faced failure more than once in their careers. The key thing is not to give up when things go south.
- Becoming profitable takes time
Another major miscalculation that small business owners commonly make is the fact that they gather barely enough funds to launch their company, without thinking about what comes next. You see, according to some surveys, it takes somewhere between 6 months and 2 years for a business to become self-sustainable. This means that, until this happens, you will have to find a way to operate while losing money. Providing steady cash-flow is where most new entrepreneurs fail, which is definitely something you need to think about before you even start. One of the best ways to deal this is to either start modest or to create an additional source of income that you can redirect towards your startup’s budget.
- Learning on example is your safest bet
In the era of the internet, it is easy to find any kind of advice if you are looking hard enough. In fact, most of the things you see from different sources may turn out to be completely contradictory. This is why your safest bet is to learn from the example of others and emulate top-dogs of your own industry. A word of caution, however, sometimes, things you pick up along the way won’t be applicable to your situation, seeing how you may not have the same starting point as the business whose success you are trying to replicate. Still, a lot can be learned by simply observing business models of the most reputable companies in your industry.
While these above-listed five issues may not seem as much, you would be surprised just how many people enter the business world without being aware of them. Moreover, seeing how overlooking a single one of them may backfire horribly, it is vital that you know where all of these dangers are coming from. Who knows, maybe just knowing there is a trap might be enough for you to avoid it altogether.