Have you ever looked at situations in your business and asked, “What are we doing wrong? What is the real problem here?” As I’ve learned, you could be sliding into a deep pit requiring skilled handling to dig out of and get back in the race. It’s rarely too late to remedy these and get your business into the money. The rankings below are from The Entrepreneur Manual, a study of over 600 startups, to which I’ve added comments from my decades of experience.

Common Startup Situations That Destroy Companies

10. Weak Key Employees. 41% of the startups studied had this issue. One or more of the employees counted upon to make things work fell down on the job, putting the team at risk. Patrick Valtin’s No-Fail Hiring along with a good battery of testing are good resources to help avoid that. But if you get someone aboard whose first action is to fire staff or who creates dissension in the team, back up and choose someone else. The problem could be with #1 below.

9. Weak Marketing Tactics. 47% had serious marketing shortfalls. The fundamentals of marketing have not changed in decades, but how they get executed and in what sequence change frequently. Just now, Facebook advertising is hot for a lot of things and we’re running a campaign there for a client which has boomed some key statistics. I also like “lumpy mail” and several other unique tactics that cause you to stand out. One very successful marketer has 20 tactics he uses continually. So think BIG here.

8. Poor Market Gap Analysis. 61% don’t uncover a viable market which will support their company’s profit objectives and therefore allow them to meet their personal goals. Market gap analysis is an extremely powerful tool for uncovering those areas in the market in which demand far exceeds supply, but most companies don’t know how to use it. Plus a high percentage of what look like market opportunities are mirages or temporary passing fads that won’t support your company long- term.

7. Weak Business Plans. 73% come up with unworkable business plans on one or both key criteria. Startup business plans have two objectives.
A. Your business plan should be a working document, a blueprint for all founders, executives and employees on how you are going to build your company.
B. Your plan should be a sales document if it is to be used to attract funds, from sophisticated investors. Approximately two-thirds of the business plans studied ignore the first goal and therefore become only shallow sales materials, which veteran investors easily spot and trash. Approximately 10% lose sight of the first objective, being complex, unreadable and therefore not read.

6. Failed Sales Forecasting. 73% of guesstimates of future sales are so unreliable that promises made to founders, key employees, vendors and investors turn into embarrassments, if not disasters. This is frequently connected to problems with other pitfalls listed here.

5. Improper Market Testing. 73% don’t know the BEST way to launch. What if your first big client wants something else (a common problem)? You need accurate data on the potential of your product or service, which groups or individuals will buy it, what they need, want or would demand, and more. If you are introducing something which may disrupt an industry or challenge established competition, you will want to get the data you need without exposing your plans, or they may beat you to market with a clone of your product. There are market testing methods you can do pretty inexpensively that will provide invaluable intelligence.

Top 4 Pitfalls of Startups – Do You Suffer from These?

4. Lack of Realization of the Necessity to Turn Cash Immediately. 76% of startups miss the boat here. Some, before they’ve generated cash, are convinced they have something so valuable that it will attract hordes of investors and free help. The harsh reality of the market is that an idea without a cash flow has very little value to investors. Even showing income but no profits, the entrepreneur seeking investor financing will lose control of his company 90+% of the time. It is much smarter to generate enough exchange with your environment to support your company to the point showing profits. Today this is much easier to do than at any prior time!

3. Improper Market Segmentation (Wrong Publics). 77% of entrepreneurs studied have not focused on the right public or publics (groups with common characteristics, like seniors living in condos, old movie buffs, pre-teen girls with iPhones, small dog owners or wealthy Latin American investors). Thus they splatter, wasting their precious marketing dollars and sales efforts “testing the market.” Rather than experiment on a production line, concentrate efforts on one or two responsive markets while surveying a variety of markets and publics looking for future expansion routes. Focus narrowly and expand using successful pilot projects.

2. Improper Price Setting. 81% of entrepreneurs price their products either too high or too low. This is silly because they either leave money on the table, or their potential customers leave their product on the table and buy elsewhere. There are methods of testing prices, some of them inexpensive.

1. Weak Incentive Systems. 93% of companies err here. Most common is to pay for time – hourly, weekly, monthly – with no bonuses or incentives. I sometimes see startups paying less than a living wage, hoping for big enough breakthroughs to generate bonuses to keep their people alive. I’ve seen only the owners receiving incentives, or incentives only for management, leaving key staff out – there are many variations. Not having worked these points out in advance, owners and management usually get so busy in the heat of the battle to launch the company that inequities get neglected. It is not uncommon for these to generate a lot of upset which spreads to other staff, vendors, investors and can even lead to mutiny or lawsuits. This is the opposite of what is needed to launch a successful company.

If you have fallen into one or more of these pitfalls, don’t stay there. It’s possible to escape and WIN!

Take Advantage of This Window of Opportunity

Do you have a start-up? Does your business need to be rebooted? For a very limited time I’m offering a free 1-hour consultation to help you evaluate your business and guide you in achieving your goals for your business and life. Call me now and let’s start changing things today! 

It is possible to achieve your goals, you know! Send me an email now or give me a call at 727-304-5000