As statistics show, success is hard to come by for a startup. Not only is there a severe money crunch, but finding right talent, building customer base and scouting for investors are also uphill tasks.
If you have a product or idea that aims to solve a pressing problem that the prospective customers constantly face, then that is half the battle won.
75% of startups fail and most founders are more than willing to share and speak about the fatal mistakes they made. Overestimating the potential success of the product/idea, lack of focus, wrong funding choices and finance-related mistakes, hiring mistakes, inability to read market sentiment, the reluctance to pivot and not keeping track of competition are among a few of the common mistakes.
If you are an entrepreneur with a fledgling startup of his or her own, reading about the mistakes people like you make will help you from going down the same path.
1. Going for an unfamiliar and invincible niche
The best way for your startup to get noticed is to launch an innovative product or cater to a marginal niche and hope it would go mainstream. But this usually takes time, luck and plenty of marketing efforts to pan out.
Stick to what you understand and know well. If you can identify a need in your sphere of work or the glaring absence of an essential service to your customers, then work towards offering a customer-focused solution.
If you are trying to sell something that your customer really needs, then the chances of you making it are really high.
So when you are planning a startup do not be scared of entering a crowded space and never try to get into some obscure niche where you won’t encounter ferocious competition. If you have a value-adding idea or product on hand then you surely have the ammunition to battle it out for customers.
2. Starting a company with the wrong co-founder
It is not like if you are a sole-founder startup you would not succeed, but almost all big companies have more than one founder.
If you have a really stellar idea, then you should have succeeded in pulling more people on board at the beginning. That does not mean you make your best friend your partner so that he does not feel left out.
It means more about getting like-minded people on board who share your belief that the idea would work and are willing to slog it out along with you. They should be guys who you can trust and get along with well.
Maturity in handling partner-relations and having decision makers with the right combination of experience and expertise will make your company more attractive to investors.
Also, raising a startup is a painful and lonely experience, where very often you are always chained to your desk and have very little to share with your family and friends. The setbacks can become too much to bear for a single person. If there is a founding team you can rely on each other for support, and no one likes to let their friends down in times of need.
3. Caving into investors
If you have taken millions of dollars from investors, you cannot expect them to be non-interfering and passive. Startups take time to take off and in majority of cases investors are a really impatient lot.
The board almost fired Steve Jobs from his position as the founder-CEO at Apple because they didn’t find him to their liking. But love them or hate them, you would not be able to ignore them.
With millions in your bank you will have to move to a swanky office, hire the best, and run the race against time to deliver what you promised to your investors.
But do not cave in and let the VC/investors run the company. Make your own decisions and do what you love best, which is your job of developing and running your business.
Don’t let your focus shift to other headaches and stubbornly refuse to be swayed by what the investors and the world say. If you show progress and promise, most investors will leave you alone and give you only so much grief that you can handle.
4. Refusing to get your hands dirty
Founders at startups have to do all the dirty work to get their business up and running. If yours is a tech startup, you cannot afford to be on your laptop the whole day.
You will have to go out and speak to prospective customers, vendors and angel investors. There is nothing that tech guys and hackers hate more.
But the initial sales pitch will have to come from your side. You have to promote your baby to others and you cannot obviously afford to hire the best marketing brains in business at this point in time.
Also, if you happen to be in the Silicon Valley or NY, do not get drawn into the media hype and party culture around you. You will have to establish a work-focused culture in your company.
Do not let your office stick to the Mon-Fri 9-5 routine. You cannot afford that either. More importantly, do not stop working on weekends.
Your family life and social life will definitely go for a toss, but you will also get to meet and bond with others in the same boat as yours.
Locating your startup in a bustling spot where companies do succeed will give your founding team more opportunities to network and scout for investors. Peer support helps you live through the low phases, and there are many of them.
5. Not knowing when to accelerate
The best skill of a newbie CEO is to conserve cash. But then there comes a time when you are aware of your customer base (in hard numbers), the CAC (customer acquisition cost) and the growth prospects.
Now, you have to step on the accelerator, hire marketing specialists, speed up growth and reach out to the market. You need to have a level-headed plan in place and spend your dollars wisely.
This is easier said than done and requires careful monitoring. Identify the key factors affecting your customer acquisition and invest in improving them. Invest in customer support, marketing and research. The clearer the path ahead the easier it is to steer your company into the future.
Each startup will encounter its own unique set of problems and troubles. Ensure that you always maintain the product/market fit and do not let things bog you down. Avoid the above given mistakes and a market-responsive startup will be able to stand on its own feet in the due course of time.
Author Bio: Simon Horton is the Founder of ShopIntegrator.com, a Hosted Shopping Cart Store Add-In. His years of experience has helped him setting up this platform. Feel free to reach him out on Google+.