The millennial generation is unique in how entrepreneurial it is. Unlike previous generations who were content to land a good job and spend a lifetime with the same company, millennials have a flexibility that is simultaneously appealing yet vexing. They are willing to give up their day jobs and found new companies or work for startups. But while they are responsible for founding highly successful companies such as Facebook, Airbnb, and Snapchat, there are numerous other companies founded by millennials that end up failing. Many of them make the same basic mistakes that confound any new business.
Poor Cash Management
You’ll often notice that many successful startups begin as partnerships. One partner brings the ideas, the other brings the financial prowess. Those that aren’t successful often lack a partner who is good with money. Nothing will sink a business quicker than poor financial management. If a business doesn’t know how much money is coming in and how much is going out, it probably isn’t going to last for long. It’s especially important if you’re looking to outside investors to help fund the company. If you can’t give them an idea of the company’s profitability or develop a long-term business plan, there’s no chance that they’re going to want to invest their money in your company.
Too Much Fundraising
Yes, money is important to a company just starting up, but spending all your time trying to raise funds from investors or venture capitalists can take too much time away from strategic planning or product development. As long as you have enough cash to tide you over in the beginning, you can get away with fundraising only when you need to. If your fundraising gets in the way of other core business functions, it will only detract from your bottom line.
Trying to Control Everything
It can be difficult for an entrepreneur to let go and let others do the work for them, especially if they’re of the mindset that “If you want it done right, you have to do it yourself.” But at some point, they’re going to have to step back and realize that they can’t do everything themselves. Otherwise, they risk micromanaging and driving away their employees. The number of business functions that exist even in a very small business takes far more time than a single individual could possibly have.
Not Hiring the Right People
The euphoria that surrounds a startup can be contagious, but it can attract the wrong type of people. It’s important to make the right kinds of hires, as an employee who doesn’t work out will cost a company in terms of training, salary, and time it takes to realize the employee wasn’t a good fit and hire someone else. When you’re starting up a new company, you can’t afford to hire people who distract you and other from the company’s mission. A little extra time taken to vet employees could pay major dividends in the future.
Spending on the Wrong Things
Businesses revolve around three core areas: the product, marketing the product, and the administrative functions necessary to support the other two areas. That encompasses production, research & development, marketing, communications, human resources, finance, etc. Spending too much on any one of these factors and neglecting others can endanger the health of your company. Great product but no marketing? Good luck getting anyone to buy your product. Great marketing but difficulty producing the product? Expect word to get out and make its way across the Internet that you can’t follow through. Striking the right balance is key.
Starting up a new company can be daunting. But if you avoid these pitfalls, there’s no reason you can’t be successful.