Atlanta is named the 3rd best city for startups in 2018 and scores an A-grade for small business friendliness. Yet, the American statistics ring true for even a dynamic economy like Atlanta. According to the Small Business Association, roughly a third of startups last just two years, and about half survive to five years.
If you’re planning to start a small business, 50/50 odds for survival past five years isn’t exactly heartwarming news. Much of the problem comes from small business owners who don’t have a concise plan; a roadmap not just for survival, but to flourish.
The best ideas won’t succeed without proper planning. And many startups get caught up with the same distractions that have taken out other great business ideas before they accomplished their goal.
Not Knowing the Market
A common stumbling block hits startups before they’ve ever ‘opened their doors’. Whether a brick-and-mortar location or an online business, new business plans must include market research. An entrepreneur needs to know how large their local market is, their target demographic, and how saturated the market currently is.
Understanding the market can help determine how to roll out the product or service. Should you focus on better quality, faster service, lower price, or another variable? Most of all, market research will give the entrepreneur an idea if there is space in the industry for their business.
Too Many Irons in the Fire
A small business needs clarity, especially at its inception. To make the most of an idea, an entrepreneur should keep their offering to one focused, evident idea. An often-encountered fault finds that the business plan includes a diverse portfolio of products. A startup shouldn’t strive to be the be-all-end-all immediately.
The temptation to ‘do more’ takes down many a businessperson. Instead, focus the business, product, or service on one very clear thing. Aarons doesn’t sell cars or real estate – they focus on credit-challenged financing for home products. Equifax doesn’t have any retail products – it’s a clearly-defined reporting service centered on technology and data. On a much smaller scale, startups must keep it concise – at least, at the start.
Reinventing the Wheel
Ideas scratched on a napkin can feel like the breakthrough of the century. But many ideas you think are ‘innovators’ and ‘disruptors’ have been done before. Entrepreneurs can get caught up in the idea, planning, and launch without looking for others who have done it before.
That’s not to say it isn’t a sound business idea. However, heartbreak comes when the patent is filed, the VC pitch is presented, or the lawsuit is served. Or, it might be that the idea has been done and has failed.
Another possibility – the startup can use the structure or knowledge gleaned from someone who’s done it before. Whether it’s to achieve the same level of success or to improve upon it, there’s no need to reinvent the wheel.
Going Straight to Launch
Going Straight to LaunchSmall businesses tend to green-light as quickly as possible, diving in headfirst without testing the waters. These startups soon discover glaring flaws in their structure, product, or service. It leaves them vulnerable, requiring either a shutdown and reboot, a change on the fly, or more likely, shutting the doors for good.
A lesson can be learned from the restaurant business. A soft launch can help expose weaknesses and flaws before the startup hits the ground running. The product or service can be tweaked and there’s time to work out kinks ahead of a hard launch.
Neglecting Marketing
It’s easy to get excited about a great business idea, product, or service offering…but does anyone else know about it? Even the best business idea can fail if the flow of customers just isn’t there.
A fundamental part of any startup is a marketing plan. For a startup, it’s recommended to set aside three to five percent of sales for marketing and advertising. Initial startup marketing is above and beyond. Plan for approximately three to six months’ worth of your expected sales for pre-launch marketing to gain exposure.
