CASH FLOW (or lack of)
Every start-up should have at least 2-3x operating capital or have access to funding BEFORE starting the business. This includes all fixed and variable expenses (including salaries). For example, if you forecast revenue of $50k for the first year of operation and expenses are budgeted for $75k there should be from $150-225k in funding at the ready.
Only in this way can a new venture weather the storm of mis-steps and mis-calculations, that always arise and be able to reassess and redirect the business's vision.
LACK OF DEMAND
So unique. So specialized is the product or service that the market is too small to sustain a thriving business. A lot of market research needs to go into making sure the product has a demand the drive sales. Many times proper market research is poorly conceived or lacking as the founders get caught-up in the excitement of their idea.
STAFFING
Proper staffing can be a killer no matter where the company is in its life cycle. Great care must be taken in hiring the right people, developing them, supporting them, listening to them, and incenting them.
NO USP
The business has no Unique Selling Proposition. No differentiation. No uniqueness. For example, every time I attend any networking meetings or socials, at least, 25% of the attendees will be SEO/Web developers. What sets any of them apart? A business must have a USP and target the right market.
POOR MANAGEMENT
Last, but not least. The entrepreneur needs to become a manager/leader. To run a business successfully you need to focus and stay focused on the original vision and build off of that. And, at all costs, as the manager/leader make certain you are fully informed as to the financial posture of the business.
So, keep these issues in mind:
- Have adequate capital to see you through the first year of operation.
- Delve deep into the market research required.
- Staff properly and diligently.
- Find your USP
- Become a Manager/Leader
Stay in touch,
Jim Lavorato
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