We all know the amount of time, energy, and commitment that goes into securing business funding. But in many ways, the true “hard work” is still ahead of you. After all, you have to figure out how to intelligently allocate your new financial resources, as well as chart the next chapter in your business’s journey.
This likely means you are getting ready to traverse into new territory, which can be both scary and exciting, all at the same time. To help reduce some of the stress and confusion, here are the 20 most common mistakes people make following a round of funding that you should be aware of:
- Spending the money all at once. You received the funding in large part through the use of some sort of business plan or strategic plan. It's very important that you follow that plan, and without going rogue. The plan that helped you get funding is a carefully written and well thought out process and you should do your best to adhere to it as much as possible.
- Not investing in infrastructure. Neglecting infrastructure can lead to inefficient operations and hinder your growth potential. Part of managing growth is managing people, equipment, physical space, etc. Make these things just as important as the bottom line.
- Hiring too many people. One of the biggest mistakes entrepreneurs make is hiring too many people too soon. Before you hire anyone, make sure you have a clear plan for how they're going to help you grow your business.
- Spending money on things that aren’t truly needed. It's easy to get caught up in the excitement of receiving funding and start spending money on things you don't need. Before you make a purchase, ask yourself if it's essential for your business. If it's not, save your money for something that is.
- Not reviewing the financials. In large part, financials drive business decisions. Reviewing and focussing on financial statements on a regular basis is critical. Even if you have an in-house bookkeeper or CFO. You should be reviewing profit and loss statements, cashflow statements and balance sheets. You should also be on top of your receivables as well (often times called aging reports).
- Ignoring taxes. It's crucial to understand your tax obligations after receiving funding. Ignoring taxes can lead to hefty penalties and legal issues.
- Changing the business model. Just because you have funding doesn't mean you need to change your business model. If your current model is working, don't fix what's not broken. Focus on growing your business using the model that you know already works. Be sure to adhere to the plan that helped you get the funding.
- Not having a contingency plan in place. Business is unpredictable. Unexpected events often arise, and it's crucial to have a contingency plan in place to handle emergencies.
- Not regularly communicating with investors. Your investors are putting their money into your business, so it's important to keep them updated on your progress. Keep your investors informed about how you are using the funds and your progress towards your goals. Regular communication builds trust and confidence, which could make additional funding easier to acquire.
- Not meeting milestones. If you don't meet your milestones, your investors may start to lose faith in your business. Make sure you have a clear plan for how you're going to achieve your goals, and track your progress so you can make sure you're on track.
- Ignoring investor insight and opinions. Your investors have experience in the business world, so it's important to listen to their advice. If they have suggestions for how you can improve your business, take their advice seriously.
- Ignoring team input. Your team is your biggest asset, and ignoring their input can lead to poor decision-making and reduced morale.
- Neglecting customer feedback. Customer feedback is critical to understanding your business's strengths and weaknesses. Ignoring feedback can lead to losing valuable customers.
- Failing to celebrate the successes and wins. It's important to celebrate your successes, no matter how small they may seem. Celebrating your successes will help you stay motivated and keep moving forward.
- Not asking for help. Every single successful entrepreneur has needed help. You can't possibly expect to know everything. Like the saying goes "If you're the smartest person in the room then you're in the wrong room". There are consulting forms like us that can help.
- Becoming too scared of failure. Failure is a part of the entrepreneurial journey. If you fail, don't give up. Learn from your mistakes and keep moving forward.
- Forgetting why you started. It's important to remember why you started your business in the first place. If you lose sight of your goals, you'll never be able to achieve them.
- Losing sight of your values. Receiving funding does not mean that you should compromise your values. Stick to your values and ethics, even during difficult times.
- Focusing solely on short-term gains. Focusing solely on short-term gains can lead to neglecting long-term goals and sustainability.
- Failing to adapt to change. Change is constant, and failing to adapt can hinder your business's growth potential. Stay nimble and be willing to adapt to changing circumstances.
This list is an amalgamation of our many years in business and helping companies grow, scale and become profitable. You will always encounter challenges but if you focus on the best path forward while determining the most effective resource to create that path, you will be successful.
Remember, receiving funding is just the beginning. It's what you do with the funding that will ultimately determine the success of your business.