For new business owners, it is a challenge to avoid startup mistakes. But, identifying those mistakes at an early stage of business will give you an edge and a higher chance of success. While there isn't a fool-proof plan to reach small business startup success, there are several reasons why tech startups fail. According to the data provided by the U.S. Bureau of Labor Statistics, 20% of new businesses fail during the first two years of operation, and roughly half of all businesses don't survive past the fifth year.
In business, prevention is always better than cure, and while it’s not always possible to prevent problems, being prepared usually pays off. But if a problem or mistake already occured, how do you ensure that it won’t happen again? Here are some common startup mistakes that you can prevent to improve your chances of success.
There are a lot of reasons why a business startup fails. It is why you have to know the most significant causes so you can avoid them as early as possible.
1. Doing It All Alone
Don’t try to complete all of your business tasks on your own – learn to delegate. Keep the 80/20 principle in mind and try to focus on the stuff that you deem the most important. Doing it all alone is a startup mistake. In reality, it requires a lot more than a single individual to launch a business. There are highs and lows, not to mention tasks that few can undertake alone. Delegate all the non-essential stuff to others. This will also help you keep your productivity up – a must for all startup entrepreneurs.
2. No Concise Vision and Direction
Another big startup mistake is disregarding the value of setting a concise startup vision. Jay DesMarteau, head of small business banking at TD Bank, said an entrepreneur’s vision, whether in words, photos, graphs or other images—helps drive the business’ development and the owner’s decisions. TD Bank survey found that one in five small business owners used a vision board or other visual representations when starting their business; 76% of those business owners said that today their business is where they envisioned it would be when they started it. When the vision is clear, everyone has a good understanding of what needs to happen and will be more productive and motivated to excel.
3. Impatient to Business Growth
Many companies get impatient to grow and, in their haste, ruin their company. Premature scaling is one huge startup mistake. According to a report published by Startup Genome, premature scaling accounts for 70% percent of all tech startup mistakes. It happens when your business expands faster than you (or your product) are ready for. Scaling is great at the right time.
4.Spending Too Little Money on Employees
According to The Alternative Board’s Survey, 20% of business owners say they would have spent more money on employees when launching their business. When running a business, make sure you are not just hiring those you need desperately for only today, but also readily employing those that you need for tomorrow.
In connection to that, Sid Soil, Owner/Founder Docudavit, believes that although hiring early-on does cost more, in the long run, it will provide lasting benefits for you, your company and your team in terms of improved customer loyalty, team culture and staff retention. Take all of the resources and time needed to discover the ideal match for each role.
5. No budget for professional assistance
At some point not seeking qualified professional assistance in today’s societal mindset of “I want it now” do-it-yourselfers. Online services like Nolo and Legal Zoom, and even over-the-counter filings at Secretary of State offices have made it incredibly easy to set up an LLC or corporation. But every tool has a purpose and function, and not knowing the purpose and function of each type of business entity can have devastating results. It will not be a waste of money. Seeking legal assistance from a professional is an investment. Soon afterward, it will save you from making mistakes when starting a business.
6. Not Tracking Financials
Kean Graham of MonetizeMore says that many founders make this commonstartup mistake. As a result, they don't know their cash flow position, monthly net income and total runway. This causes them to make bad decisions because they don't have the proper numbers. When it comes to startups, having money is a big deal and it needs proper handling. If there is improper management and use of finances, a new business may never set sail. Be sure that someone good with numbers can help out with this.
7. Not Creating Successful Systems and Processes
Without systems and processes in place, no startup can mature. It is the primary reason why tech startups fail. No matter the size of the startup, Tyler Bream feels that systematizing the critical functions of the business -- like customer acquisition andlead generation -- simplifies your business, helps save money, and enables quicker and easier growth.
8. Not Investigating the Market
According to co-founder and chief executive officer of OneSignal, George Deglin stated that it is a common startup mistake to not invest time into understanding the market or the customers you're building for. As for the technical founders, writing code can seem easier than talking to customers, but there's no way to know if you're on the right track unless you're constantly getting feedback from your audience. It's important to recognize that building a great product often doesn't translate into a successful business. Many companies find themselves focusing on a market that's simply too small to build a big business in.
One oftentimes unnoticed startup mistakes is choosing the wrong platform. You make sure your marketing reaches the right people. Make sure the type of marketing lines up with the audience you want to reach.
Big billboards may not be the way to go for an Internet company, just as online ads may not be the way to go for a heavy-construction business. If the need is already established, make sure you're reaching the audience who needs your product or service. These days, your location on the Internet and your social media strength alone can be just as important as your company's physical location in a shopping district. An online presence will let people know that they can give you their business a chance. If the demand is already there, the availability and visibility of your business is the next important step.
10. Wrong Business Investors
According to the co-founder and chief executive officer of Chargebee, Krish Subramanian advises that entrepreneurs should recognize that, before starting a business, their investors are more than just financial backers. A company's first set of investors will make or break it. These individuals place their confidence in a business's potential without having a proof of concept presented to them. It is why, to be at lower risk of dealing with this startup mistake, (once businesses have undergone their seed funding), they'll need to interact with investors who look at the business's growth and sustainability.
3 Successful Startup Ideas from Entrepreneurs Featured in Tech Domains
Some mistakes can be avoided if there’s somebody who taught you about it. As Eleanor Roosevelt said, “Learn from the mistakes of others. You can’t live long enough to make them all yourself.” Here are some quotable ideas you can learn from successful startup entrepreneurs:
1.Find the right problem and solution.
Lesson from entrepreneur Alex Shumaiev, CEO & Co-founder at CruiseBe.
You will make money on this problem if you find a perfect solution and sell it to the right people. If the idea behind your business is not bringing any value to people, it won’t last long.
You will make money on this problem if you find a perfect solution and sell it to the right people. If the idea behind your business is not bringing any value to people, it won’t last long.
Being an entrepreneur means you need to start every day with motivation. People’s feedback about your product should bring you energy to bring more meaning to everything that you create.
Sometimes, you’ll regret the choices you have made because they didn’t prove to be right, but you should be willing to learn the lessons that those decisions taught you.
Networking and meeting new people, mentors, and advisors are crucial, as these people can validate your business idea. Sometimes their advice is wise; sometimes it’s not. Learn how to filter everything you hear and keep only what you think is appropriate.
2.Think about lifetime service delivery to customers.
Team related learning by entrepreneur Walt Bayliss, owner of Universal Media Online
If you’re going to create a solution, you should be able to deliver it for the next 10 years. That’s the only way to generate ongoing cash flow.
Don’t ask one customer to pay $500,000 but ask 500,000 customers to pay $1.00. If all customers contribute on a regular basis, you will grow your business for sure.
3.Work on constant product iterations.
Entrepreneurial lesson by Charles Cridland, co-founder of YourParkingSpace.co.uk
“Don’t attempt to achieve the end vision on the day of your startup launch. Think evolution rather than revolution.
In our early days, we made the mistake of believing that we knew what the final platform would look like, the features that would be required, and our entire user journey
The result was a lot of wasted time. There were complex development projects that suffered from frequent delays and releases that were riddled with bugs.
We now work on a product iteration basis, always having a vision of where we’d like to take the product, but taking a step-by-step approach that allows us to constantly adjust and pivot where required based on customer feedback and sales statistics. I’d always recommend this approach to others.”
Bottom Line
Failure will be part of the journey to success. Learning from the past mistakes of other businesseswillmake you wiser. It is why you have to take note of the top 10 startup mistakes and avoid those in your business, while applying what you’ve learned from the 3 successful entrepreneurs.
Another biggest change you can make is hiring people to do everything for you so that you canhave more time to think. Starting up doesn’t always mean you have to do it all alone.
If you’ll need a partner who can assist you in your startup business journey, connect with Pareto today. With the help from our team of dedicated professionals, we can help you get your business where you want it to be!
