The perils of starting a business are many. Early startups face more challenges today than ever before, and the best way to avoid detrimental mistakes is to learn from those who have tread the path before you. The conception and growth of my three businesses — SaleHoo, Affilorama and Doubledot Media Limited — has not been without its speed bumps. Use what I’ve learned to help you move forward by avoiding these four mistakes.
Not measuring metrics
It is never too early to start gathering data on what works. No company is exactly like your own, but it’s not enough just to have an original idea. You also need a plan for generating revenue, measuring success and continuing growth. One of the best ways to create that plan is to obtain data on your own company, which you can then use to inform your decisions. A failed enterprise of mine, a personalized web home page called Zeadoo, suffered because there was no way to monetise or support it. One of the reasons Zeadoo failed was because we didn’t gather enough data on its performance.
You should launch a basic product or service as soon as possible, and start getting some feedback. The perfectionist in you might bristle at the idea, but it will give you real customer reviews that will allow you to make tangible improvements. It also allows you to start making money sooner. Quite likely, you think adding something will improve the product or service, but in reality, your customers just don’t care for it. Measuring your metrics means getting what you have out to your customer base and allowing them to make the decision, which is the ultimate excellence in customer service.
One of my favorite books, “Lean Analytics,” explores this topic in-depth, and it is an essential read for anyone starting a business. It advises readers on which metrics to track and when to track them, as well as explaining how this information can help to identify customers and introduce new products. A successful startup is defined by embracing innovation, adapting rapidly and continually searching for improvements. Attention to metrics is the foundation of that success.
Assuming agencies are a safer bet than individual freelancers for outsourced work
Outsourcing is a smart business decision that you can and should use in the early stages of launching a business. When high-level planning begins taking over your time, outsourcing allows you to get a task done — ideally by someone with more expertise — without bringing on a full-time employee. It can even potentially create a productive, long-term business relationship.
But outsourcing also means a complicated hiring process that can pose serious challenges for a new startup. Opinions vary widely regarding the merits of agencies versus independent freelancers. There are a variety of factors to consider when making this decision, including the urgency of the project and your budget. Agencies tend to be more costly but usually have a larger team to commit to your project, allowing for completion in a shorter timeframe. Freelancers are often cheaper because they have less overhead and administration costs, but you’re dealing with an individual, meaning you sacrifice some flexibility.
In my experience, freelancers are the way to go. In the early stages of SaleHoo, my co-founder and I contracted a web design agency that charged us $35,000 and ultimately presented us with a product we couldn’t use. We then employed a freelance designer who charged a third of the price, had a greater understanding of the project and presented us with an excellent final product. Based on this experience and other ones like it, I advise startups to spend a little more time researching and hiring a freelancer to avoid paying higher agency prices. Paying more does not always mean you’ll receive the best product, and in the early phases of your business, every penny counts.
Choosing a business partner with the same skill-set
While it’s important to get along with your business partner, it’s not important that you two are identical! In fact, it’s detrimental to your business to have two of the same people in charge. Partners should complement each other, not be mirror copies. Your partner should have an agreeable personality, share your business goals and strengthen your business in the areas you find more challenging (or just less interesting).
I chose to partner with my co-founder Mark Ling because his skills in online business and marketing were complementary to mine. While we were never close, we played squash together when we were teenagers. When I came up with the idea for SaleHoo, I wanted someone to bounce ideas off, and Mark immediately came to mind. As partners, we are able to build on each other’s strengths and compensate for each other’s weaknesses, which is the symbiosis that creates a successful business relationship. I was lucky that I already knew someone who met these requirements. If that person isn’t immediately apparent to you, it’s worth advertising for the position and seeking a co-founder to round out your skills and your business.
Fearing startup costs
Many potentially successful entrepreneurs might cite startup costs as the factor that deterred them from following through with a great idea — and that is tragic. When I launched SaleHoo with Mark, our pooled money for the venture was just $1,000. Other successful businesses have started with much less.
Don’t be afraid to ask for help in the form of loans or offer work on an IOU basis, as we did with our developer for several months before we started turning a profit. If you have a good idea, other people will believe in it and stick around for the tough early days. Starting a businesses doesn’t have to cost a fortune and the lack of a fortune shouldn’t be a reason for a great idea to gather dust on a shelf.
While some errors can be productive learning opportunities, these four mistakes are likely to be detrimental to the fragile growth of a young business. Avoiding them is key to any startup’s success — and it’s not all that hard to do so: Measure your metrics, choose a business partner who complements your knowledge and skills, outsource cautiously and never let fear get the better of you.
Simon can be followed on most major social platforms including Twitter, Google+, Facebook and LinkedIn and regularly comments for Forbes, SMH, NZ Business and CEO Blog Nation.
In his spare time Simon enjoys playing squash, snowboarding and spending time with his wife and daughter.
Latest posts by Simon Slade (see all)
- 4 Mistakes for Startups to Avoid (from a 3-time CEO) - February 23, 2016
- Get That Email Opened: The Dos and Don’ts of Email Subject Lines - February 16, 2016
- How To Master Content Marketing With The No. 1 Newsletter Strategy - July 14, 2015