The 5 Most Common Mistakes Made By Startups

The 5 Most Common Mistakes Made By Startups

Ben Yoskovitz | March 15th 2007 – 06:43

Entrepreneurs are no strangers to mistakes. Mistakes will happen – with considerable frequency – and the value in making those mistakes is learning from them and avoiding them in the future. You can also study the mistakes of others that came before. Plenty of successful entrepreneurs are quite open about mistakes they've made, why they made them and what they learned. We don't need to keep repeating each other's mistakes over and over.

But, that's quite often the case. When it comes to startup mistakes you'll see many companies making the same ones over and over.

Here are 5 of the most common mistakes made by startups:

  1. Staying in Stealth Mode Too Long. New startups seem quite fond of stealth mode (or its newer cousin "ninja mode"), when they're hiding under the radar but still hyping just enough to try and pique interest. But stay in stealth mode too long and you run the risk of disappearing off the radar. Never mind the fact that you can't sell your new product or service while in stealth mode and therefore can't generate any revenue. There are plenty of reasons why startups launch too slowly; really you need to force yourself to launch and get past all the excuses.
  2. Not Focusing on the User. Who are you building your new product for? Who is the precise target? Many startups can give a generic answer to that question, but very few of them are really honed in on the specific wants of their "perfect user." This is a combination of too little research and too much enthusiasm for what they think is "the next killer idea." This mistake is compounded if you're building something that you wouldn't use yourself. Building something you would use makes things easier – you're the target user. Otherwise you need to take a much more pragmatic approach.

    As well, many startups take the approach of "being everything to everyone." That strategy never works. You end up being nothing to anyone.

  3. Trying To Do Everything. If a task isn't core to your business try and outsource it. Entrepreneurs are extremely fond of saying they wear many hats (which is true!) but there's a limit to what's reasonable in the hat-wearing department. Lots of things can be outsourced, and although you'll be paying someone else to do the work, you'll be freeing up precious time of your own. That time will be infinitely more valuable than the money you spend.
  4. Not Having Enough Infrastructure. Many startups don't have the proper tools in place to start their business. Primarily, money and time. It's getting cheaper and cheaper to start companies nowadays but it's never free. Lots of people start companies without realizing how much money it's actually going to take. When they clue in, and decide they don't have the money to invest (or they're not willing to part with it), they're in trouble.

    Startups face similar challenges with time. People often start companies while working full-time jobs. It's doable but damn hard. And as soon as the startup gets a bit rocky or other interests come into play, the startup company gets shelved or delayed. Paul Graham comments on this beautifully in The 18 Mistakes That Kill Startups. His theory is that people get into startups half-heartedly and that's what kills them. I think that's part of the answer. The other side of that coin is that people truly do care and believe in what they're doing, but they don't have the infrastructure and bandwidth in place to make it happen.

    Infrastructure issues are also related to a startup's lack of connections and resources to find good vendors, good hires, mentors and people to rely on. A couple guys in a garage may have a great idea and tons of talent but when they need help securing a loan or handling a business-related task they may not have the network or foundation in place to support them.

  5. Forgetting About Branding, Marketing and Sales. I know there are examples of companies succeeding with a "build it and they will come" approach. Some people argue if you build something people want they'll find it and plunk down their hard-earned money. It happens. But more often than not you need to develop real, actionable and savvy branding, marketing and sales strategies. You might have a great product and the wrong message. Or a killer software application that no one knows about. It's rare to have a startup where the founders (or one of them) has real experience in branding, marketing and sales. The result is either all the founders do it (and often poorly) or they all pass the buck.

    You can take a "build it and they will come" approach and hope for the world to pick up your scent and fall in love with you, or you can figure out how you'll get the message out, what that message will be and how you'll generate leads. Go with the latter.

The good news is that almost every mistake can be undone, and it's rare that one mistake kills a startup completely. So feel free to make them – but skip those listed above…

The 5 Most Common Mistakes Made By Startups

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