3 Mistakes Startups and Small Business Make

In today’s business world, it’s not uncommon to find small businesses and startups on every corner. The entrepreneurial spirit has caught on like a wildfire and people’s innovative ideas have yet to cease. However, with so many small businesses and startups popping up everywhere, a lot of these companies tend to make the same mistakes when they’re first starting out - And while there are a multitude of mistakes these companies can make, we’re highlighting what we feel are three major issues.

What is the Difference Between a Startup and a Small Business?

Is there one? According to Forbes, small businesses and startups are different due to the following factors: “the growth intent”, “the funding methods”, and “different end visions”. What does this mean? Forbes says that “the growth intent” for a startup is to “disrupt the the market with an impactful business model”, while the “growth intent” for a small business is that “small businesses need a market” to be able to “to reach and serve all of those within [said] market in an efficient way.” In other words, small businesses do not intend to disrupt an industry.

When speaking about “the funding methods”, Forbes suggests that both startups and small businesses share this in common: “the challenge of finding financing”. This is because both small businesses and startups are risky and it’s tough to try to find investors or venture capitalists right off the bat. One difference here is that small businesses typically go into debt financing through loans to meet those goals.

Finally, what are “different end visions”? Forbes says that startups and small businesses typically have differing end goals - startups are mostly temporary and are meant to be temporary, while small businesses are started to last.

*This is not true for all startups/small businesses, this is Forbes’ opinion/observation.*

3 Mistakes Both Startups and Small Businesses Make

Hiring the Wrong People Early On- Whenever you start a business, whether it’s a startup or a small business, you have to hire the right people right out of the gate. Those first 1-3 years are crucial to any new business and you don’t want to hire someone who is not willing to invest time and energy into this new venture. Basically, the worst thing you could do during the beginning stages of a small business or a startup is hire lazy employees. It takes a ton of time, energy, motivation, and money to run a business, especially a brand new one where the odds of failure are stacked against you. Here’s some insight from Medium.com:

“Startups generally have 3–4 people with similar mindset working for a cause in early days. They work 18 hours a day to make it happen. When you hire a wrong person, they end up being 1/3rd of your company if there are 3 people….We got our best people when we hired them based on culture. Now we have 2 interview rounds. The first and most important round is about them being a good culture fit and the second round is a technical round. This habit not only gets you the right people but they also end up enjoying working with awesome people. We look at [the] 4Hs in everyone (Being Happy, Humble, Honest and Hungry)...They can always be trained but they can never be changed.”

Seeking Publicity Too Soon - Listen, there’s nothing wrong with trying to show off your new concept or business - seriously, nothing wrong with it. However, the issues start to arise when publicity and advertising starts way too soon. Why? Well, most of the time advertising or getting a generous form of publicity means money. It’s expensive to advertise a business, especially if you’re advertising on all platforms including social media. Also, starting to spread the word about your business too soon heightens the risk of failure - you’ve spent 20k on advertising, everyone knows, and your business goes under. Now what? Check out this quote from Inc on the topic:

“Just last week I heard from an entrepreneur who has a very promising business concept related to the wedding planning industry. Sadly, that's about all she had--a concept, yet she sought publicity well before she was ready to accommodate the opportunities it brought her way. This individual compounded her problem by investing in expansion after, rather than prior to, gaining national publicity. With disappointed prospects around the country, her reputation took a hit and growth is at a standstill. If you're going national with your PR, be ready for it. Otherwise, remain local. But be certain you're well prepared for even this lesser level of growth.”

Not Listening to Advice- How can you do anything correctly if you have no direction or no example from people before you? Seriously, if you’re thinking of starting a business and have no entrepreneurial experience, have no contacts, and haven’t researched the venture at all, how are you going to do it? Are you going to wing it?...Probably not a good idea. Any good business professional has had words of advice thrown at them for years from past greats and their experience. It’s a good thing to listen and take advice because it allows you to grow, learn, and plan for the future, especially in the business world. Luckily, Fundera offers great advice below with a solution too. Check it out:

“It’s great that you’re passionate about your idea—and sometimes, you need to ignore the naysayers to realize your dream. However, some zealous business owners fall trap to dismissing any constructive criticism or advice they receive, which can lead you to miss the opportunity to address possible issues before they happen.

Solution: Figure out how to sort through truly negative comments and constructive criticism. If someone is offering you genuine advice, consider stopping and listening carefully. Impartial sources like potential customers, investors, lenders or mentors are more likely to be honest with you than family and friends, so pay particular attention to what they have to say and you can avoid making some serious mistakes with your small business.”

If you’re looking to start a small business or a startup, that’s great! You totally should follow your passions, however, it’s in your best interest to look at the pitfalls of those before you so that you can learn what not to do. While we only mentioned 3 mistakes, there are hundreds and hundreds to read through- So start learning!

Want to read more from Applicantone? Check out our blog titled Should Small Businesses Hire Externally? OR 3 Easy Ways to Grow your Network.