Starting a business isn’t easy. There are so many things to think about and the pressure of it all can cause startups to make poor business decisions.
Even the very best startups have made mistakes but it’s the determined and motivated that have risen above it.
Here are the top five common mistakes that startups make, alongside some tips on how they can be avoided.
Making something that no one wants
One of the most widely quoted stats is that 90 per cent of startups fail within their first year.
Depending on how you look at it, and the factors you want to attribute to it, the main reason behind this high failure rate is producing a product or service that no one wants.
As a founder, you’re often torn between creating the next ‘big thing’ and figuring out what people actually want or need.
During the early years of your business, you should embark on an extensive customer discovery journey, find your product market fit, and really figure out if your solution will actually solve a problem.
Don’t assume your business will disrupt an existing market or that early-adaptors will turn into paying customers. Rather, take every opportunity to talk to your customers, use data to test assumptions, and have a feedback loop in place.
Viewing investment as the ultimate goal
You’ll see stories in the press about ‘X’ company securing a huge funding round, but this can create a false sense of reality, where big investment is framed as the startup’s ultimate goal. It’s not.
Founders need to be strategic about the fundraising process. Whether it’s deciding on the right time to seek external investment, the amount you’ll need or doing due diligence on the most suitable investors to approach, it’s crucial that every step is planned thoroughly.
Research reveals that it takes 9 months for a startup to raise a series A round. But, what often doesn’t get visibility is how long the fundraising process takes, and how many conversations it will take a founder to raise this round.
Hiding behind tech jargon
Startups often jump straight to the technical aspect of their business or product, without talking about the problem they’re solving in a relatable way.
This is a problem we often see at Startupbootcamp when founders pitch to join our accelerator programs. Undeniably, technology is important in our space, however when talking to investors, partners and media, it’s much more effective to tell a compelling, holistic story that explains your vision or the problem you’re trying to solve without using buzzwords and jargon.
Entrepreneurs need to perfect their story, which will act as the foundation of the business; explain when their big ‘aha!’ moment happened, their inspiration, and how they’re different from the competition.
Trying to do it alone
We’re big believers in the importance of team, especially when startups have more than one co-founder.
If you speak to an investor or a reputable accelerator, you’ll find the team dynamic is often the key driver in the decision-making process of whether they’ll work with a startup or not.
Sure, it can be tempting to decide to go at it alone and do everything your way. But running a startup is hard and if you have a big vision for your business then you’ll need to find a team and/or a co-founder who has complementary skills to drive the idea forward.
Trying to do it all
Entrepreneurs are passionate people who are full of ideas. While this is a desirable trait to have, it can also have some drawbacks.
We often see founders stretching themselves too thin, which leads to them either burning out or losing sight of their vision.
But, having a solid team in place will allow you delegate responsibilities so that you can focus on the core areas in the business, where your expertise lie.
Andy Shannon, Head of Startupbootcamp Global