5 mistakes startups make
With the abundance of information and tools available online, and the rapid growth of technology in the 21st century, there has never been a better time for budding entrepreneurs to create businesses that innovate and disrupt.
However, it can be daunting to venture into the world of new business when only one in 10 startups succeed.
Although it can be difficult to predict which startups will succeed, and keeping in mind that the majority of today’s well-known entrepreneurs cite failure as integral to their success, there are some things you can do to mitigate the risk of making a costly mistake. Here are five common startup mistakes to look out for when launching your business, and tips on how to avoid them.
1. Choosing the wrong team
The old adage is that you are only as good as the team around you, and when it comes to startups this couldn’t be more accurate. Launching a startup often means working late nights, making mistakes and needing to compromise – and this is made all the more difficult when your team can’t support you.
How to avoid it: Choose your co-founders carefully, and thoroughly check background references before hiring anyone new. If their reference says they’d rehire your applicant in a heartbeat, you’re likely on to a winner.
2. Not seeking criticism
As an entrepreneur, you’re taking a risk. You’re putting funds, time, and potentially your reputation on the line. Because of this, it’s easy for entrepreneurs to overvalue positive feedback and disregard negative feedback. However, criticism in healthy doses can help your product or service develop, as well as challenge your thinking.
How to avoid it: ask for honest feedback from professionals in similar industries. If you’re worried someone will sugar-coat their answer, simply give them your app or direct them to your website and analyse their response – the way they navigate and use it will tell you everything you need to know.
3. Pricing incorrectly
For both established and startup companies, pricing is crucial to ensure both steady cash flow and demand. However, many startups make the mistake of pricing too high or too low and either undercutting themselves or missing out on potential profits – or, more importantly, forgetting to include the cost of developing the product (and the cost of your time) in the final price.
How to avoid it: Find the right balance. In other words, conduct research to find out the maximum amount customers are willing to pay for your product to ensure maximum profits without decreasing demand. To find the best balance before launch, it’s critical to research your competitors to discover how much people are willing to pay. Once you’ve launched, it’s all about being able to test and adapt your pricing to ensure you hit that sweet spot of maximum profit and maximum demand.
4. Not testing the market
You have the right team, your product is developed and you have done your research on pricing. You have adapted to feedback, and now you have launched your product only to find you aren’t getting the traction you expected. In short, after all this hard work, you’ve discovered the demand isn’t there. The market is difficult to predict and demand can shift easily. Because of this, testing the market is essential to ensure your product is on the road to success.
How to avoid it: Conduct market research. It’s important to not only ask for feedback, but to release your product on a small scale (or produce a beta version of an app). A beta launch is crucial to iron out the kinks and ensure your product is ready when it comes to your mass-market launch.
5. Not sustaining growth
Your business is growing well and the demand is there. You want to expand and fuel your growth, but you don’t have enough funds. While the majority of startups fail, yours could be the one in 10, so it’s important to plan for success. That means having enough funds for growth. Startups that can’t sustain growth risk losing out on market share or simply being forgotten after the initial launch.
How to avoid it: Ensure you have a strategy for growth and the tools necessary to achieve that growth. Whether that means funds to hire new team members or enough marketing capital to ensure your product reaches more people, a growth plan is essential to helping you reach that next level of success.
What’s the best piece of advice you have for entrepreneurs?