Do you want to know the mistakes that can doom your business? Read this blog post for a list of 7 common pitfalls that startup founders make. These are things which we’ve either done ourselves or seen other people do and they caused problems later on. This article will highlight these mistakes and give steps on how to avoid them in order to become successful.
Being an entrepreneur is hard work with a huge amount of stress involved. To succeed you need perseverance and a lot of luck but to fail you just need one mistake after another with your startup
The tech startup community is very good at recognizing success stories and celebrating the heroes but very bad at being brutally honest about start-up failure. We all have friends who got funded or converted their ideas into viable products or were acquired, but we hardly hear from those that didn’t make it.
This article gives a detailed description of some common mistakes that seed-funded startup founders make which can ultimately lead to product death or business failure…
Here are the 7 biggest ones:
1) No clear idea about what you want to build — Before you jump into building something, figure out why your idea will be successful. Taking decisions in uncertainty is never an option when time is your enemy as a CEO and money is hard to come by as an early stage startup.
2) No one wants what you are building — It is important to test your idea with real potential customers/users before deciding to invest time and money in it. One of the best ways to do it is to use tools like UXPin or InVision. If no one likes your product, back out quickly and pivot if needed (which will also give you a great bargaining chip when raising funding).
3) Poorly defined customer segment — Before building a product, know who your customers are? Who will use your product? How much are they willing to pay for it? What utility does your product provide? What pain points does it solve? Do some research on the users that you are targeting.
4) Poorly defined value proposition — What is your product offering to the customer? Why would they be willing to pay for it? How unique and useful is it compared to existing alternatives? It’s more than just features or benefits, you need a clear vision of what makes your solution different from other options available today.
5) Ineffective marketing strategy — You can have the greatest product on earth but if no one knows about it you will fail in business. The key is to understand which channels can bring buyers who are not yet aware of your existence (social media), where to find them (search engines) and how much you should spend on acquiring new customers (cost per acquisition).
6) No business model — Your startup should have a clear monetization strategy. It can be straightforward e-commerce but it could also be an advertising or freemium model etc. It is critical to have a good understanding of the opportunity you are getting into and how much money you will make in the future from this product/service.
7) Poor team management — You might have assembled a great team, but if you aren’t able to manage them effectively things will fall apart very fast. If your employees don’t feel appreciated, they won’t work as hard for the company. Make sure your employees know that their contribution matters since they really do!
“ 80% of startups fail because they run out of money/resources.”
That means that 80% of the startups out there don’t deliver what they promised, are not able to attract more funding and faces an early death. While many would like to believe otherwise, even a well funded startup can die if it doesn’t manage its expectations from the beginning. It is all about managing your burn rate (the amount of cash you spend each month) by making sure that your runway (time left before running out of cash) is long enough for you to raise additional funds or generate revenue.
The above list does not mean that other things aren’t important and there are probably way more mistakes that inexperienced founders make but these are the top ones as outlined by Eric Ries in his book “The Lean StartUp” and that we see being repeated over and over again.
Good luck to you all!