Part of surviving in the startup world is learning from your mistakes. Sometimes, both yours and others’. You can learn valuable lessons from mistakes startups make before making the startup plunge.
Many people dream of starting their own business and going solo rather than making it big in paid employment. Starting an enterprise gives you the opportunity to operate independently, be innovative, implement changes, and indulge a passion.
5 Mistakes Startups Make
A startup involves a lot more than just a good idea for a business. It requires discipline, hard work, financial planning, skills, and perseverance. About 90% of all startups fail. Hence, it is imperative that you start off right in your venture. Some mistakes startups make that leads to their failure are:
Wrong choice of products or services to sell
According to a survey, nearly 45 percent of startups failed to take off because of the wrong service or product choice.
It is not enough to have a passion for the product; due diligence needs to be done. Explore and investigate the market thoroughly before getting into the business. Do not follow into the footsteps of successful ventures. They have already found their niche; copying them is not the answer.
Instead, try to fulfill a gap in their product cycle or supply chain.
Money running dry
This is a common mistake startups make. Quite a lot of them are able to raise initial investments. What does not work out is the investment in the business and making enough money to see them through the next two years.
Most times, the product fails to generate enough interest, the marketing is week, and investors are not convinced about the product tow spend good money over bad.
It is not always about the money. Sometimes the enterprise fails due to the lack of right talent. Leadership qualities are missing in the founding members. There is a failure to build the right team and attract the right talent.
Overcompensating new hires
Another mistake that startups make is go the other way round and hire indiscriminately in order to justify the investment. There is a tendency to overcompensate hirees, which hikes up the running costs.
Some people believe that they can plonk some cash into a business account, then things will work out by themselves.
That is a fallacy. Many a business have run aground because people got trigger happy with the initial seed money they got.
A fundamental business rule is that you need to put in money to earn more money. Especially in a startup, you need to budget out everything. Hiring indiscriminately and spending money on salaries is not conducive to good budget practices.
If you are not good at managing the money, then take professional advice.
Market data says 47% of Series A startups spend $400k or more per month.
Only 2 in 5 startups are profitable, and other startups will either break even (1 in 3) or continue to lose money (1 in 3).
A business evolves as it takes shape. Once you start a business, your idea may need a little bit of tweaking or even some drastic changes.
One needs to adjust to the market or even sometimes abandon the initial idea or product and adjust according to the market need. But some people are 100 percent sold to their initial idea and cannot make the necessary adjustment.
Perseverance and seeing it through
10% of startups fail within the first year. Learn what needs to be done. If in the journey you need to do some heavy lifting on the job, then learn the skills or apply them or gather experience to do it right, but persist in your goal. The process may take time but see it through. Most startups lose steam halfway and fail to convince investors to put in more money or to raise initial funding after starting not their own.
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