Are you toying around with the idea of starting a company and worried about all the things that can possibly go wrong? You’re not alone, and you’re definitely not in uncharted waters. There are thousands of entrepreneurs who are working on starting their own company, or who have just launched their own company. Lets talk about some common mistakes made when starting out, and how to avoid using them.
Know your potential
One of the biggest mistakes you can make early on is not believing that your business is going to be a big success. This often leads to inadequate planning, and making decisions that are convenient for your current situation, rather than ones that will pay off in the long run. Don’t shortchange yourself – plan big.
Don’t let people drag down your business before it even has a chance to really take off. If someone on your team isn’t working out, it’s best to part ways with them sooner rather than later. It may be a hard call to make, but it’s important to have the right people on your team during the infancy of your start-up.
When recruiting for your start-up, it’s easy to overlook experienced individuals. People often lead toward finding young talent and training them, rather than finding individuals with real experience under their belts. But don’t fool yourself, experience matters. Bringing in seasoned talent is absolutely critical to the success and momentum of a start-up. It may cost a little more, but it’s worth every penny.
Find your niche
A common mistake new businesses make is trying to cater to a wide array of customer needs. Some of the best advice when starting out would be to find your niche, focus on it, and execute. Don’t try and do everything right away. If you pick one vertical and do it extremely well, other people will come.
If you’re itching to take your company public, you need to ensure that you properly assess your company in its current state to see if it’s the right direction to take your business in. Just because you can issue an IPO, doesn’t mean that you necessarily should. Here are four important questions that you should be asking yourself before you decide to take your company public:
What is your company’s value proposition?
This is probably the most important question you need to be asking yourself. How you propose the value of your company will determine whether investors will be open to hearing your company’s story. A good place to start when putting together your company’s story is its growth prospects. Investors want to know how quickly you’re going to grow and what numbers you’re going to produce. They’re also going to want to know about your long-term strategy and what you offer that your competitors don’t.
Is my company big enough to do well on the public markets?
There really is no benchmark in size that needs to be reached before you can take your company public. However it’s typically best to ensure that you have reliable a growth and revenue stream that can stand up to other companies in your industry before you issue your IPO.
Is your company about to change direction?
If you’re planning to change your business model, it’s much easier to do it before you go public. If you decide to change your business model shortly after your IPO, you run the risk of losing your shareholder’s confidence and they may decide to sell.
Are my board of directors up good enough?
If you take your company public, your board of directors will immediately become much more visible, which is why it’s so important to have the right members on your team. Your board should be comprised of experienced professionals who have sat on boards before, and most importantly, they need to be completely independent of your company, so as not to introduce the risk of conflicts of interest.