Now is the time to start the business you’ve dreamed of. Venture capitalism is on the rise with $148 billion invested in enterprises last year. The patent application system is prime for changes to make it easier for small businesses to obtain intellectual property protection.
There is also a growing “gig economy”. This rise in independent contractors means there is more talent available for you to hire at an affordable rate.
Combine all of these elements, and you have the funding, talent, and ability to protect your innovation from competitors. Despite this perfect mix of elements, you still need to be careful you don’t fall victim to these five startup killers.
1. Lack of Market Knowledge
You have an idea for a product or service, and you know that other people will love it too. But what data do you have to back this up? Too many entrepreneurs assume with pure optimism that their idea will succeed.
There are two main factors you need to research. First, get your product in front of potential customers, and see if there is any interest.
Second, is the market oversaturated? Find out how many other companies are already in the space doing what you want to do. High competition shouldn’t necessarily kill your idea. It should make you think hard about the increased resources and effort it will take to claim your space in the market.
2. Failure To Hire Experienced Legal Counsel
Having the right lawyer can mean the difference between success and failure for your startup. A lawyer will ensure you have the proper documentation in place to protect the business, partners, and investors.
Then you’ll need legal advice to ensure all of your intellectual property (IP) is protected. This includes everything from your actual product to your brand name and logo. This will protect you from potential competitors infringing on your IP and stealing your business.
Once you begin to hire employees, legal counsel can ensure you comply with local employment laws. Finally, depending on your product or service, you may need legal counsel to challenge local ordinances and codes.
3. Team Problems
“The two big startup killers are when there’s just no market for what you are doing, and team problems.” – Techstars co-founder and serial entrepreneur Scott Gerber knows a few things about potential startup pitfalls.
His statement includes some wise advice. One of the biggest killers to your new startup is letting team problems distract from the task at hand, growing your new business.
This can include several different issues, choosing the wrong partner, having an uneven equity split, no clear leader, or not having a plan for when someone leaves the company.
You can prevent all of these problems by doing some planning — thoroughly research potential investors. Then consider how to split the equity to ensure all parties stay committed in the long run.
Your third step is to create a clear authority structure for the startup. This will define the authority structure.
4. Lack of Marketing
You could have the best service or product in the world, but if people don’t know about it, then your startup will fail. Marketing is a must for new businesses.
Aim to have your new brand appear everywhere and in front of your target customer. This is easier than ever, thanks to social media and the internet.
Your first option is to try and do everything yourself. This can save you money but cost you labor hours. You also risk pulling too much of your attention away from your core business.
Another option is to hire an outside agency. The right agency can give you a large amount of exposure for the money.
5. Lack of Passion
Startups require an enormous amount of time, energy, and attention. If you are not proud and passionate about your new business, your confidence will waver, and you will lose interest. As the leader of your new startup, if you become complacent, so will everyone below you.
Only venture into a startup that you are proud of and passionate about. This emotional connection will help you power through the challenges and stay focused on your end goal of success. Learn what competent legal counsel can do for your startup