How to Avoid the Top Mistakes That Startups Make. Follow these steps to make your journey easier.
Building a startup is a tough but rewarding journey. For the most part at each step; The startup founder needs to be careful about what he or she decides to do. Furthermore, every stage of the startup journey is likely to hinge on several important decisions. These are some of the typical mistakes that entrepreneurs should be careful to avoid when building their businesses. Avoid the Top Mistakes That Startups Make!
Also Read: The Top 20 Reasons Startups Fail
Many startup founders are not flexible with their original ideas and their decision-making process.
Flexibility is a key element in startup success. To begin with initially. For instance it is vital that you understand market needs and potential demand for your product or service. For the most part, research, market surveys, and validation are critical. Thus assuming that you are launching a product. On the whole it’s smart to build the product in stages. Hence be sure to check what the market needs and validate the product at each stage. However if market feedback conflicts with your design, you can minimize the losses involved in redesign. Thus being flexible helps you quickly pivot your startup based on market feedback. Above all rigidly sticking to your original core concept may result in failure.
Startups may hire too many people with similar skill sets.
Diversification for instance of the team’s personalities, skill sets. Especially backgrounds is essential to building a strong company. Startups generally may be tempted to hire like-minded people with the same skill set and personality type. It’s by and large better to have diverse perspective among employees. Since different perspectives often lead to the best possible solutions. For instance if your startup is a software company; For example, you might need a PhD to be one of the top architects. However you also need junior programmers to balance out experience, skills, and speed.
Cost is another balancing act! In this case it often makes sense to have a mix of in-house and out-house resources. Many successful startups outsource some of their required services such as HR, payroll, benefits, and IT services. Thus outsourcing product development to a certain degree. In summary it can also give startups a major cost-performance benefit.
Many founders don’t fully understand the market.
For the most part it is very important that startup founders know the market well. In short some startup founders launch their business in an environment with simply too much competition. As a rule ask yourself; “What is my unique selling proposition and especially how will we differentiate ourselves from the competition?”. Above all as you learn more about the industry you’re entering into. For the most part you will understand hurdles and how you can overcome them. Understanding the market and for the most part being well prepared. Subsequently will help you execute successfully.
Founders may not know how much capital to raise and how much equity to offer.
As can be seen many startup founders. For the most part do not know how much equity to give away! Especially at each stage of the startup growth cycle. Thus in many cases, they end up giving up too much equity. Especially at an early stage of the company, in return for little capital. When they need to raise more funds, the deal becomes less attractive for new investors. Generally knowing how much equity to offer at each stage is critical. Hence as the startup progresses toward an exit. The founders and key team members need enough shares to remain motivated to take the company forward. Otherwise, the team won’t have sufficient driving force to reach a successful liquidity event.
Founders raise capital from one or a limited number of sources.
In short do not raise from just one VC or one angel. All things considered you will need capital from multiple sources to drive your growth. For instance diversification of capital raised. In short this is a key element of startup success. Above all relying on a single party VC or angel is a common mistake; the problem is that there may be less overall support in future financing rounds. For instance multiple investors help solve this problem. Generally speaking as they each have their own pools of capital and networks to support startups needs. For instance at each stage of their growth.
The takeaway: Overall, the startup building process is both challenging and gratifying. Given these points if you as a founder want to lead a successful startup. To sum up then take your time to collect enough information and understand your customer before you launch. On the whole especially if you want to broaden your view of startup success. Then to begin with consider working in a startup or a venture capital firm. In this case no matter what, you’ll make mistakes as a startup founder. However it’s key to recognize them quickly and make constant adjustments along the way to success.
Avoid the Top Mistakes That Startups Make!