In spite of having read about all of the 5 things I am going to mention now, even I committed the mistakes and I should admit that many of them were costly; in terms of both money and time. The internet age has made so much information available to us that we tend to think ourselves as 'not prone to errors'. However humans have a tendency of taking in whatever is favorable to them and ignoring everything else. And hence I ignored a lot of good information and had to learn my mistakes the hard way. Following is the list of my top mistakes:
- An idea is the most important part while starting a business - A completely wrong notion. In fact, anything you start can be a good business provided you are really good at the execution level. Suppose you still want to spend time finding an idea, go ahead but simultaneously start a very small business probably with one customer at a time and you will learn a lot of things that will be useful later.
- Equities and shares for investors need to be decided at the beginning - One of the most tiresome and time consuming activities which can be completely avoided at the start. When you are starting a business for the first time, nothing is really clear about the cashflow, return on investment or breakeven period. Being first-timers, you tend to over-estimate your capabilities and under-estimate resource requirements. At this stage, it is always better to live with either your own cash or with debt from friends and family. Keep the equities for later.
- We'll get 100 raw materials of item 'x' from company 'a' to start with and then ramp up our production as we add more customers - Suppliers do not work that way in most of the cases. They usually have minimum order requirements. i.e company 'a' will not be willing to supply you anything less than 500 items. The result is that the cash you have will not be enough now or you will have to hunt for a supplier who meets your needs. Either your working capital is depleted or your time is depleted. So, think whether manufacturing is really possible at the place where you live.
- Exterior design of the product is very important to attract customers - This may not be true for all products. Design may be important for apple products but may not really be necessary for a power adapter. Size may be the only criteria for customers in this case. So, don't think too much on the design part. Focus on may be sales strategies and customer service instead. Design can be improved later on.
- Demand for this product is very high and there are no good quality products in the market, so we must get into this business - Big mistake. Sometimes people are happy with the kind of products available in the market, even if they are bad. Even if you provide a better product, people wouldn't be very sure of its quality as the bad products have already installed a level of skepticism in them. Of course, better products will stand out and slowly change customer mindset. However, a startup's first requirement is cashflow and not 'bringing about change'. So, understand your customer and what he wants before you think of providing him with a high quality product.
Well, I have listed the top 5 things on my mind right now. I am sure there will be much more to learn as the days progress. Or there is even a chance that the things I have learnt now will be re-learnt in a different way.