“Failure is simply the opportunity to begin again, only this time more intelligently,” – so said Henry Ford, a little-known business man who could teach us as thing or two about failed start-ups.
We jest, of course, but the part about failed start-ups is all true. Ford, like all great entrepreneurs and inventors, was hardly an overnight business success. And with the statistics pointing out that 3 out of 4 start-ups fail, it seems that there are plenty of ways for a small, up-and-coming business to go wrong.
Despite these doom and gloom numbers, it seems that UK entrepreneurs are still hopeful, as the government has recently announced that it has approved its 25,000th small business Start Up Loan, which provides financial support and mentoring.
So how can you make sure that your budding business doesn’t fall into the same trap of the three out of four SMEs who don’t make it? Check out some of the most important mistakes to avoid below, and heed their advice…
1. Moving too fast and tripping up
Business Entrepreneur, James Caan, has pointed the finger at enthusiastic people who are more excited about running with an idea than sitting back to see where it sits in the big picture and if it’s viable as a business.
It’s an easy way to spend a lot of time and money on a supposed stroke of genius, only to realise that you never properly considered its place in the market or the competition.
2. Having just one founder
Having just one founder could indicate a vote of no confidence, according to this article. If you are starting a business and can’t persuade others to join you, then it probably says something about your business idea or your skills as a salesman.
If neither of those are true, then if nothing else having just one founder means an awful lot of work and diverse responsibilities piled upon one person.
3. Not pitching well to investors
According to this piece, there are many wrong ways you can go about approaching investors – but a key point to take away is that their time is valuable, and they appreciate those who understand their proposed project.
4. Being unwilling to educate
“Do your homework,” says Theo Paphitis, who has boldly stated that he believes entrepreneurship should be part of the National Curriculum and that those who fail don’t put enough effort into their research.
“You wouldn’t sit an exam without doing any preparation… A business is no different. It’s about knowing more than the next guy or girl and performing better, and the only way you can do that is through knowledge.”
5. Not practising proper bookkeeping
If you want to be a business owner, you have to be comfortable understanding the nitty gritty of finance and legal as well as the large picture, directional stuff.
Here are 10 common start-up bookkeeping mistakes you need to avoid – whether you’re the person in charge of finances or just in charge of signing them off, a small slip up in this arena could easily snowball on you further down the line.
6. Dreading failure
Telling yourself to simply stop being afraid of failure isn’t an easy ask, but it’s crucial according to Arianna Huffington.
“At some point, I learnt not to dread failure,” she commented in an interview. “I strongly believe that we are not put on this earth just to accumulate victories and trophies and avoid failures; but rather to be whittled and sandpapered down until what’s left is who we are.”
7. Not being unique
In a thriving society as saturated with businesses as ours is, it’s hard not to get bested by the competition – but that can mean the difference between a successful start-up and losing your life’s savings.
This case study from personal finance service Wesabe is a great example. In the company ‘post-mortem’, Marc Hedlund notes: “Even before we launched, we heard about other people working on similar ideas, and a slew of companies soon launched in our wake.”
8. Creating a business with no customers
You’ve probably heard of Richard Branson, but less known is his failed business venture that involved him dressing up in full wedding dress (actually, we think we can see where this started to go wrong…)
‘Virgin Brides’, a bridal wear shop, was launched by Richard back in 1996. Moving into a market as competitive as bridal retail, they quickly found that there just weren’t enough customers to go round everyone, and it closed in 2007.
You can see he glorious photo of Richard in full bridal attire here.