Start-Up Business Mistakes to Avoid, Pt. 2September 24th, 2012 by Front Office Staff
Mistakes to avoid during your business start-up.
Hello again everyone. Last week, we talked about some of the mistakes to avoid and steps to take, when your business is in the start-up phase. Focusing and honing your ideas so you’re able to generate immediate understanding and excitement in investors,partners, potential employees and potential clients with an Elevator Pitch. Instead of possibly losing them, by taking too long to make your points. This week, I’m going to cover “time and money.”
Keep manageable time frames
If your product or service is still on the drawing board, getting too far ahead of yourself is a trap. People can become sidetracked by plans for future versions or additional venues. At this stage of the game, looking two or three years ahead is the most you should allow yourself. Focus on feeding your baby, because it has to mature before it can support you. The future will be here in its own good time; plan for it, but don’t live for it.
We all know that a failure to plan is like planning to fail, but adhering to your plan blindly can be just as deadly. Successful business people know they must constantly adjust course, while never losing sight of their final destination. Neil Armstrong and his crew were onlydirectly on course for the Moon, for 20% of the journey. Yet they still landed within 12 feet of their intended target.
Be Realistic About Costs and Capitalization
The Reno area is littered with under-capitalized start-ups, which were unknowingly doomed from the start. Keeping your expenses under control is vital, but don’t confuse capitalization with costs. If you shortchange your start-up when estimating the funds it will require you to raise, you’ve already limited your chances for success.
Ideally, you should capitalize as if your start-up won’t generate ANY income for a year, and not see a profit for at least two more. That means you should have access to enough funding to cover all of your business and personal expenses for an extended period of time. For some, that means keeping a job while nurturing their start-up. If sales outpace that estimate, congratulations.
In the late ’90s, David Neeleman determined that he needed $160 million to effectively launch JetBlue, and do it right. Far more money than an airline start-up had ever raised, before. David stuck to his guns and raised the money at a time when established airlines were fighting to stay afloat. But David knew customers just wanted cheap fares on comfortable flights. As a result, JetBlue had one of the most successful airline launches of all time, and turned a profit only six months.
Come back next week, when we’ll discuss finding and hiring the right personnel, outsourcing, and when it’s time to think about expanding or franchising. As always, you’re more than welcome to contact me here at Front Office Staff Reno, so we can discuss all the options we have available to help start-up organizations deal with communications and phone issues.
Have a great day,