5 Common Pitfalls for Startup Companies

Starting up a new company and leading it to success is a notoriously difficult challenge for even the most dynamic of entrepreneurs to undertake. And while there are any number of ways in which a fledgling company can be derailed, many make the same costly mistakes as one another along the way. 

Here’s a look at five such pitfalls that are best avoided if you’re looking to take a new business from startup to sustainability.

1. Lack of preparation

Knowing precisely when to start a new company is not always easy and it’s important to seize the moment as opportunities arise. However, it’s vital too that an eagerness to get started doesn’t override a commitment to proper preparation. Some mistakes can be forgiven and overcome by a fresh and ambitious startup but others can be disastrous enough to leave a new company floundering from its earliest days.

2. Overestimating demand (or your company’s uniqueness)

A key part of preparing to launch a startup should be an assessment of demand that exists in your particular field. It isn’t always easy or possible to determine the extent of the demand that’s out there but it shouldn’t be too difficult to ascertain whether or not there is any demand at all for whatever it is that you’re offering.

A key issue to consider here is whether or not your services are unique and, if not, then you’ll need to know whether or not you stand a chance of being truly competitive.

3. Taking on too much debt

If your startup is looking good and there is reason to be optimistic about levels of demand and your broader prospects then the temptation can be to assume that the more money you can access the better life will be. In practice though, it is easy for startup bosses to be overeager and to take on more debt than they need simply because they are able to secure credit on reasonable terms. For many startups, this can prove a very costly mistake as cash flows tighten up and debt repayments hinder medium or longer-term progress down the line.

4. Taking on too many employees too quickly

Employing new people and adding to the scale of a workforce is a significant allocation of resources for any small, medium or even large company in any field. So for a startup company, any such commitment needs to be very carefully considered because they cannot usually be undone easily or inexpensively. It is not uncommon for a startup’s development to be severely hindered or scuppered entirely by having a workforce that is larger than necessary and not cost-effective.

5. Taking on too few employees

While it can be a hindrance for a company to have more staff on board than are required, it can also be a major problem if there are too few people around to help drive a new business forward. Getting the balance right in this respect is crucial for startups but it can be extremely difficult for determined founders to accept that they cannot do absolutely everything and to delegate in the best interests of growth and development for the future.