Tech innovation and digitalization have made it easier for anyone with a good idea to be an entrepreneur. The hardest part of launching a start-up is, well, starting. However, most start-ups fail, with about 20% failing within the first year. Why is it so difficult for start-ups to succeed? Macropay reviews common start-up mistakes to help you be one out of 10 start-ups that do make it.
Mistaking your Dream for a Goal
Many start-ups are based on good ideas. However, a good idea without a plan is just a dream. The problem with dreams is that you have to wake up to reality at some point. Regardless of how good your start-up idea is, you still need a solid plan to succeed.
A good business plan must factor in several key points. These include a growth forecast, revenue model, market analysis, user acquisition and retention. In addition, your business plan must include SMART goals. SMART stands for Specific, Measurable, Achievable, Relevant, and Time-Bound. These goals should be broken down into achievable steps that are reviewed regularly.
Mistaking Hype for Longevity
Many start-ups mistake hype for longevity. Hype is a market frenzy generated mainly through marketing. Unfortunately, hype is not sustainable and can lead start-ups to scale too quickly. Without proper retention strategies this initial interest will likely wane off. As a result, your start-up burns through funding too quickly.
Instead, start-ups need to be patient and adapt to market needs. Almost 50% of start-ups fail because they don’t address a market need. While these start-ups may create initial hype, they fail to generate longevity. As such, ongoing market research is a must. Pay attention to customer needs and adapt quickly and consistently address real client needs.
Underestimating your Funding Needs
Most start-ups only secure funding to start without factoring in what they will need to survive until they start making a profit. According to a Macropay review, it takes start-ups between 18 to 24 months to start generating profits. Therefore, it is important for start-ups to have an adequate line of credit to avoid failure. In addition, it is important to secure funding for emergencies and unexpected expenses.
Apart from your personal financing and savings, start-ups can obtain funding from bank loans, private lenders, angel investors and financial partners.
Inadequate Financial Tracking
Another common mistake made by start-ups is failing to properly track your expenses. This mistake makes it impossible to adequately plan. It also makes it difficult to make informed decisions if you over or underestimate your financial standing. While it might seem counterproductive to track your spending when you are not making a profit, this helps you better manage your overhead expenses. It also helps you keep track of your available credit enabling you to outlive your competitors.
Launching a start-up can be daunting and exciting. However, it is important to adequately prepare and launch a project that appeals to a target market. Do your homework through market research. Secure a line of credit that will cover your operating expenses for at least 18 months. Above all, be agile and adaptable. One way to do this is by partnering with service providers that give you flexibility and enhance your infrastructure like Macropay.
Macropay provides businesses with the tools they need to easily add alternative payment methods and gain access to open banking technology. Contact them to learn more.