- Potential startup entrepreneurs can oftentimes get swept up in the excitement of their ideas, products, and services and make some devastating, yet common, mistakes.
- Underestimating the amount of time and money needed to get your company going can lead to serious cash flow issues down the line.
- And failing to adjust to the market and respond to consumer needs can also ensure a startup’s failure.
- Here are some of the biggest mistakes entrepreneurs make when trying to get their startups off the ground.
- Visit Business Insider’s homepage for more stories.
You’ve got a great idea, you’re brimming with enthusiasm, and you’re pretty sure that the world is going to beat a path to your door to buy your new product or service.
But the road ahead will be filled with speed bumps and potholes, from outside competition to legal disputes within your own company.
To help you steer clear of at least some of them, we asked several successful entrepreneurs and experts for their take on the biggest mistakes that startup entrepreneurs make and how to avoid them.
Here are the biggest mistakes entrepreneurs make when trying to get their startups off the ground.
They underestimate how much time and money getting off the ground will take
So you think you’ve squirreled enough money away to get you through the lean – read “poor” – startup days. Think again.
“I think we underestimate how long things will take and how much money we will need,” said Francine Glick, founder of Water Journey. “I think it takes twice as long and costs three times as much as we assume it will.”
Make sure you’ve got some extra financial padding. Hang on to that full-time job a bit longer while you work on your startup in your free time.
They take too long to launch
“You can plan and research forever, but the key is to just get out there, and then there will be natural feedback and momentum to carry you forward,” Thomas Donohoe, founder of Level Agency, told Business Insider. “You don’t have to have everything perfect and figured out in order to launch.”
In fact, if you labour over your idea for too long, you may be wasting time creating something that’s not quite right for your customers. Get what you’re offering in front of them and let them help you create what they need most.
They fail to begin with the end in mind
“Entrepreneurs often begin with excitement and optimism thinking they will do whatever it takes to succeed,” said Michael Fellows, founder of Broadway Lab, a software development company. “Taking time to plan your vision, mission, values, and how your service will be differentiated from the rest will create focus and effectiveness.”
Adopting a big picture approach from the outset will force you to ask tough questions sooner rather than later, and will give you a roadmap to refer to when things get rough.
They don’t research their competition
“Although it may seem counterintuitive, you want competitors,” said Heather Huhman, fertility consultant and serial entrepreneur. “You don’t want so many that the market is saturated, but enough that your first touchpoint with potential clients (or) customers isn’t educating them about the need for your product or service.”
Competitors validate the market for you. If there aren’t any, you may want to ask yourself a key question – is the problem I’m trying to solve widespread enough to warrant creating a business to solve it?
The fall in love with their idea too hard
“Founders fall in love with their ideas and often don’t do the hard work needed to figure out exactly who else is in love with what they are selling,” said Adam Mendler, entrepreneur and CEO of the Veloz Group.
Of course, you should be passionate about your business, but founders who are too emotionally invested often ignore the warning signs that they’re missing the mark. Remember that if your product or service is not getting traction, it’s not the customers’ fault – it’s yours.
They don’t evolve when they should
“It’s important to stay objective and read the market,” said Shama Hyber, founder of Zen Media. “Don’t be afraid to pivot if you find that your original ideal isn’t taking off as you’d hoped.”
Respond to what the market needs rather than what you want to give it.
“Remember,” she said, “YouTube originally was meant to be a dating website. The founders eventually realised the market didn’t want to date via videos – but they did want to just upload and share videos. The rest is history.”
They neglect legal protection
So you’re starting a business with a college friend, you’ve written your plan on the back of a napkin, and sealed the deal with a clink of your glasses. Great, but don’t neglect the next steps.
Failure to address these beginning steps can come back to bite you years down the line.
They assume they need to raise a ton of money right away
Entrepreneurs often think they need to raise outside capital right away. But the bottom line is that you’re much better off beginning by earning money on a smaller scale for your startup.
“There’s always a way to validate a concept on a small scale and small dollars, whether it’s with a small digital campaign, farmer’s markets, Kickstarter, et cetera,” said Zach Zelner, CEO of PupSocks. “Until you’ve got 100 passionate users – which can usually be acquired by word of mouth – you’re not ready to grow.”
Once you’ve proven that there’s market demand for your product, potential investors will see your company as more valuable and it will be easier to raise money.
They spend too much, too soon
Fancy offices, Aeron chairs, and expensive lunches? Forget about it. You’ll bleed yourself dry before you even make your first sale. Likewise with hiring a staff.
“It’s a warm and comfortable feeling to have dedicated full-time staff. It makes you feel legit,” Justin Beegel, founder of Infographic World, said. “But it will eat you alive if the economics don’t support having that number of people on payroll.”
And guess who’ll go without a paycheck if cashflow gets dicey? You. Keep your organisation lean until you reach a revenue level that can truly support employees.
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