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The same team management mistakes that anybody can make.
Startups with money often hire too many people too quickly. Contract out the work until you're sure you've found the right person - those early hires are very significant. Don't hire anybody that won't get along with everybody else, and don't hire anybody who will require much management: you're not in the management business, you're in the whatever-it-is-you're-in business. If everybody gets along and everybody is good you shouldn't have too many problems. Just be honest, fair, consistent and communicative.
They can make quite a few mistakes, but the biggest one would have to be 'not working to a realistic budget' and hiring people that doesn't fit the business model'.
Iam with Mr Sanjeev Kumar answer.
The wrong team Bill Aulet, managing director of the Martin Trust Center for MIT Entrepreneurship and author of Disciplined Entrepreneurship, says choosing the wrong team is the single costliest error entrepreneurs make, resulting in not only lost income and time but depleted morale.
"Choosing who to hire and work with in a startup is like playing basketball in the schoolyard; you can pick your friends and play for them, but if youwant to be good and continue to be on the court, you have to carefully pick your team," he explains.
It's crucial to choose people with varying skill sets. However, Aulet says, "much like a great sports team, they must also share some common values and the ability to trust each other in tough situations. That's why past experience working with your co-founders and early employees in stressful times is much more important than being friends."
Expensive mistake #2: Bad pricing"My single biggest mistake with my first business--a handbag company--was in pricing," says Sarah Shaw, CEO of Entreprenette, a consulting firm in Durango, Colo. Hers is a common misstep for product manufacturers."I didn't understand that with any kind of clothing or accessories, you have to calculate the square footage of fabric, including the wasted fabric," Shaw explains. Without an accurate understanding of her costs, she couldn't price her products correctly.
"I thought you sort of doubled everything, but that's not correct," she says. "It's a2.5-times markup from cost to wholesale, which covers marketing, the showroom fee, all your expenses."
By the end of her first two years in business, Shaw had put in more than $100,000 of her own money. Thanks to perseverance and media buzz (celebrities loved her bags), she ended up with $1 million in annual revenue and attracted investors, but she couldn't recover from the downturn after9/11 and closed the business in2002.Like Shaw, Tobin Booth, CEO of Blue Oak Energy, paid dearly for a pricing mistake. It occurred in2010 when the California-based company, which engineers and constructs solar photovoltaic power systems, took on a contract to install solar units for a retail chain with stores in eight states.
"That was a level of complexity we had zero experience with, in a very competitive market," he says. "What we didn't understand across all these states were the tax consequences and how much variation there was in labor rates. Then there were delays because of weather and shipping."
The company, which also hadn't planned for project delays that led to incurring storage fees, lost about $500,000 in2011. Booth says the miscalculation was one of the worst experiences he has been through as a business owner, but there were some positives: "The cliché is absolutely correct. The painful experiences are the ones you learn best from."
Expensive mistake #3: Waiting for perfect when good will doWhen you've got a killer idea, it's natural to want to introduce it to the world in a fully formed state. But it doesn't take a CPA to figure out that the longer you take to launch, the longer you go without money coming in.
"This is a common mistake, especially for tech people," says Drew Williams, co-author of Feed the Startup Beast. "Many want to build an app and won't let it go until it's perfect, but then you take too long and spend too much." Specifically, this error will likely leave you with no "runway"--the cash you'll need to sustain you as you're trying to get your product off the ground once it's ready, but before you have customers.
"You need to come up with the simplest, basic version of your product that gets the idea across and try to find someone you can sell it to," Williams says. "Find one or two clients who are willing to do a pilot where you build, test and iterate it. Inevitably, your product will be different than what you expect, and then you build it. If you get a real, live client, you create a better product in a very cost-effective way."
