The first year is a perilous time for a start-up. However much research you’ve done, however tight your business plan and however many hours you put in, a new business is still far more vulnerable than an established company. But knowing the pitfalls of that first year can help you weather those shocks and plan for the future.
![Margherita Cesca](https://www.jbs.cam.ac.uk/wp-content/uploads/2020/05/2016-reasonswhy-startupsrookieerrors-cesca-229x205-1.jpg)
Margherita Cesca left an established firm in 2011 to found her own architectural practice, Architettura MCMM. Four years later, and after going through the tailored entrepreneurship programme, EnterpriseWISE, at Cambridge Judge Business School, she shares the pitfalls she encountered in those crucial first 12 months – and how she learned from them.
Pitfall #1: Not expecting the unexpected
Cesca had it all worked out: she was just 30, so had plenty of time to build a career in-house if her start-up didn’t work out. She had plenty of experience working for a big firm, she wasn’t married, didn’t have children or a mortgage and had sufficient savings to take the plunge. What could possibly go wrong? “Well, I started my business on 4 July – Independence Day – and the next month, I fell pregnant. It all happened so quickly.” In retrospect, she says, having to do things a little differently in that first year worked out well. “I had to slow down a little bit, and I concentrated more on building a strong foundation. And that was actually really good. I was working a lot on where I wanted to be in the market and looking for a niche. It was almost as if I was still in the thinking stage, even though I was already taking on work.”
Pitfall #2: Spend, spend, spend
When that first injection of cash comes in, it’s tempting to splash it on non-essentials. Stay small, advises Cesca, and think of that cash as yours, not business expenses. “I worked mostly from home the first year, and I still do,” she says. “I don’t technically need an office – nobody has ever asked to come to my office. It’s just a massive expense, especially when you start off. You don’t know that you’re going to make enough to cover that costs. I know some people who buy the best computers, the best phones, the best everything, as you’ve got this million pound project – it’s on the business. But the next year, what do you do? You can’t keep up with it. You need to be cautious.”
Pitfall #3: Too big, too soon
Landing a big contract or order in your first year is a fantastic morale booster. But now you’ve got to fulfil it – and not just fulfil it to the letter, but deliver over and above in order to cement your credibility and build your reputation. That can mean employing so many people that you’re left without enough to draw your own salary – or it could, in a worst-case scenario, mean that you can’t deliver on what you promised at all. Initially Cesca was doing everything herself – finance, marketing, drawing and measurements – in order to ensure that her costs were covered and she made a profit. “You can get big money but very little return,” she points out. “But then, at the end of the first year, you can learn from that experience. By then, you know how much you have to charge in order to both be fair to the client and to guarantee a profit to yourself. It’s not the size of the project or the amount of money you get in, in that first year – it’s how you manage them.”
Pitfall #4: Burnout
Getting a new business off the ground is a 24/7 enterprise. Hard work and long hours are a given, and in that first year you can feel as if you’re never not working. Everything’s an opportunity, says Cesca. “You go for a drink, you see an opportunity, you talk to someone, you see an opportunity – you can never relax, because everything is an opportunity.” But that can become counterproductive, she admits. “It’s not very healthy. It’s very tiring. You have to slow down a bit, even though you feel like you have to be full-on all the time, because it’s your first year in business. But you still need to manage your time.”
Pitfall #5: Mindset adjustment
If you’ve already worked within a company, the first year of being your own boss can feel very odd. Suddenly the support structures you were used to are no longer there – and everything’s on you. Don’t be afraid of that feeling, says Cesca – you’ll get used to it. “It did feel strange at the beginning,” she remembers. “I used to work for a massive company, big projects, nice clients, everything was really good and secure and I could still be working for them. But now I can put my mark on my work. I’ve got responsibility for what I’ve done. It’s mine and everyone knows that. And if it goes wrong, it’s up to me to fix it.”