Why is it necessary to have a backup plan while starting a new business
One of the famous quote – If Plan A fails remember, There are 25 more letters!
And another quote that counters says – The minute you have a backup plan, you have admitted you are not going to succeed!
If you are amongst the start-up brigade who is soon to enter the arena, that might be confusing! As is it good to have a Plan b or not? And this post will exactly talk about that, so please continue reading –
Do You Need A Back Up Plan?
When your parents enroll you in a school, they do not have a backup plan of what if you fail! Because no matter what, the time, energy and money you spent in a school in learning will certify you as 10th Pass or 12th Pass. Similarly when you are working on a laptop on an MS Word/MS Excel with every change you hit Ctrl+S to save your job so that the time and energy you are putting up in your deliverable does not get ruined.
In a similar fashion, when your bright idea is about to turn to a business it is advisable to have a backup plan because of the time, energy and money you are spending to execute it needs to be utilized in the case for some reason plan A does not work!
So, it is always advisable to have a backup plan so that you could reach to the finishing line even with some delay.
Start-up mistakes you should avoid
As per a report from qz – Since June 2014, some 2,281 Indian startups had begun operations across a range of sectors, including e-commerce, health technology, robotics, logistics, business intelligence and analytics, food technology, and online recruitment. But, according to data analyzed by Delhi-based research firm Xeler8, 997 of these have already failed.
So, let’s take a closer look at the possible reasons for the failures –
- Neglecting the key of what market needs
- Short Of Cash, Once you are funded you need to plan systematically so that just when you are about to take-off, you don’t run out-of-cash.
- The Team and their skills, if you and your team do not have enough skills to cater to a business need, it would surely be a failure.
- Not considering the competitors and their strategy
Choosing investors over users, if you are caught up in a fight on what investors say and what user want. It would be good to choose user as investors would eventually make money if users are happy.
Bad timing for the launch
- Not finalizing your marketing strategy
- NO planning about P&L, cash flow, etcBad hires
How do you insulate your start-up if things go wrong
- Choose The Right Structure for Your Firm – Paperwork may be easy if you go for registering the business However, that also means any debts and liabilities would also be taken care by you. So it’s advisable to choose the structuring and team.
- Get a mentor –Getting an expert view is always recommended and you need a neutral opinion that could say how your execution is working out. So make sure to hire a mentor!
- Work on Actual Costing rather than guess work – Make sure to have a detailed plan of costings and expenditure, do not rely on guesswork!
- Get legal help – Studying on the internet and working on legal matters may not be a good idea, its best to get help from experts!
Separate out personal and business finance – Do not mix the two accounts, keep them separate or else you would never know the profits and loss and you may not able to draft a clear picture for your personal
Prioritize Tasks – Do not put your money in tasks that are “good to have.” Make a separate list of “must-haves” and “Good-to-have” services and put money only in must-haves.
Do not take your future sales into account – Many start-ups work in terms of future earnings, that would be a big mistake to work on debts.
Have Emergency Funds Ready – What is the execution fails, do you have money to pay employees salary and office space cost? Make sure to keep that fund in place.
We hope we have answered your queries on how you can save your startup from common mistakes.If you still have any unanswered questions or need help, feel free to contact us here.
We would be glad to help you with your planning and investment related decisions.
Content Strategist Dilzer Consultants Pvt Ltd