Countless startups fail every year. But there are not countless reasons that they fail. People are falling into the same traps over and over. If they could just avoid those common mistakes, the chances of their company being successful would significantly increase.
Mentors, VCs and serial entrepreneurs all say they routinely see entrepreneurs fall prey to a common set of mistakes. So what are they? You should know.
Article originates from entrepeneur.com
1. Not prepping your life
No one would show up to run the Boston Marathon without training first. The same should be true of startups. You need to warm up with some prelaunch training, from getting proper rest and nutrition to shoring up relationships. “You have to be rigorous about making sure you’re ready and that every area of your life is in check,” Kamil says. A startup will take a toll on your life, guaranteed.
If friends and family don’t understand what’s about to happen and are not supportive of your vision, they’ll cause personal misery, not to mention a major distraction from the business. Have a candid conversation to manage expectations.
2. Confusing a product with a business
Often people do not know how to build upon their success. There has been said that a product solves an individual need but a real business has something customers will come back for again and again.
Here’s how to make the distinction: Do you have potential revenue streams beyond the customer’s initial purchase of a product? That’s a key factor for prospective investors, who “want to see what the next thing is and want to make sure that there’s some longevity beyond what you’re offering today.
3. Not paying for expertise
We say this with full respect: You’re not good at everything. You can’t be. And yet, every part of a business should be done expertly -- particularly the tricky stuff like taxes and legal issues. Structuring not only the company but also potential investments in the wrong way can come back to haunt you.
So where it really matters, don’t download some free online guide or think you can handle it yourself. Find an expert whose job is to know exactly what you need to do.
4. Ignoring data
You can’t just believe you’ll succeed—you need to actually crunch some numbers and figure out if you will succeed. Magical thinking can kill any business. There has to be data that validates that your big idea is real, or at least provides a leading indicator that it could be. Once you collect that data, use it to create key performance indicators or milestones to show your idea or business is progressing.
5. Scaling too quickly
According to a report by Startup Genome seventy-four percent of high-growth internet startups fail because they scaled too fast, too soon. People raise money, think they’re flush with cash and then spend it on the wrong things. But by the time they realize that spending isn’t getting them anywhere, it’s often too late.
What are they spending on? On anything -- from marketing to hiring too many employees too quickly. But the basic problem is the same: They’re draining the budget on things that aren’t essential to expansion or determining whether their business is even viable.
6. Clinging to the wrong idea
Sometimes people have to realize that sometimes they are pushing up the wrong hill. This mistake is especially prevalent among first-time entrepreneurs and people entering an unfamiliar market -- folks who just fall in love with their original idea and can’t recognize how much it’s failing.
Don’t go on gut. Go on evidence. Evaluate how your product fits in the market. Maybe you run experiments on what tactics or product tweaks draw in customers the best. Or maybe you closely track how much it costs you to acquire each customer -- and if small tweaks make that cost go up or down.
7. Failing to delegate
It’s perhaps the most classic problem in management: Rather than give up control and trust others to take the reins, you try to do everything yourself -- and fail. The instinct is understandable, of course.
So, what to do? Delegate, obviously. Start by drawing up processes, almost like a guidebook for how to do things the way they should be done. That way you’ll feel calmer, and your employees will have the direction they need.
8. Thinking money solves everything
Struggling entrepreneurs often think that if they can just raise another round of financing, their problems will be solved. But money doesn’t work like that. It can’t solve a fundamental issue with a business model but if your business model isn’t sound, throwing money at it is not going to work. You have to fix the problem first, and then raise the money. Doing it the other way around will only get you in more trouble.
9. Underestimating how long sales take
Let’s get this out of the way: Sales take time. Many startups even think they can close a big enterprise account in three to six months -- but in reality, a deal like that can take more than a year. And if your business plan doesn’t account for that, you’re going to be in trouble.
There are many companies that run out of money because they have been too aggressive in estimating their timelines.
10. Fearing failure
“Fail fast” may be a popular catchphrase, but no matter how much entrepreneurs may glorify failure, there’s still that scary word: fail. And nobody wants to be the opposite of success.
Change the mindset. You didn’t fail -- you ran an experiment that will improve your next business. It’s learning, although it hurts a little bit each time but now you can apply that lesson to move forward and make your business better.