Home Startup 7 Mistakes Startups Make that Cost Their Business

7 Mistakes Startups Make that Cost Their Business

By
Oluwaseun Sanni
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251
18192

Mistakes are inevitable – in the business world and our everyday lives. But what if you could avoid some mistakes by learning from the mistakes of others?

As you set out to establish a startup or seek to grow one, note that someone somewhere has done something similar to what you want to do. So, you could learn from them one way or the other. That’s why it’s always advisable for entrepreneurs to read all sorts of books.

Based on the experience of others, here are 7 costly mistakes you cannot afford to make with your startup:

1. The “I can do it all alone” mentality

Facebook, Twitter, Instagram, Google, Netflix, Apple, and Microsoft are all household names worldwide. But aside all of them being household names, one other thing they have in common is they are all founded by two or more persons.

Establishing a startup is no easy task, so it often requires more than one pair of hands. Aside the fact that a co-founder will provide moral, technical and/or financial support, they also provide helping hands to handle tasks.

You may have the technical know-how, but do you know how to drive sales? Maybe you have the mental picture and vision for the business, but do you know the practical steps to make all of it a reality? “Everybody needs somebody”, but some startup founders overlook this vital point and later come back to blame themselves.

2. Money management issues

Money is an essential factor when running a startup. You know, marketing, salary and other expenses never stop.

Now, one of the most common mistakes startup founders make is yielding to the urge to overspend. This, sometimes, occur in the form of hiring more staff than the business needs or can afford. It’s an urge that many startup founders, usually due to peer pressure or the need to impress (*clears throat* we have a team over 100 staff!)

Other issues associated with mismanagement of funds, especially in the African startup ecosystem, was addressed in this article on why African businesses fail.

3. Starting without a Business Plan

Having a solid business plan plays a crucial role in determining the success of a startup. But what’s even the function of a business plan? It serves as a guide to the startup and helps to navigate the business in the right direction. Hence, establishing a startup without a business plan is as good as embarking on a journey to a new place without a compass (or Google map).

Here are some critical questions a good business plan must answer:

What is the purpose of the startup? Who are the target customers? What are the values and mission? What direction is the startup headed? Who are the startup’s competitors? What metrics would be used to measure success?

A business plan is quite essential and sensitive. Refer to this guide to learn how to write a business plan that is truly a plan.

4. Not knowing when and how to pivot

Pivoting does not make you a failure. Instead, it shows mental agility and flexibility.

Some of your favourite companies started with different ideas from what they have become today. For instance, you’ve probably never heard of Odeo, but you know Twitter. Odeo was initially launched to be a podcasting platform, but the platform has somehow metamorphosed into what we know as Twitter today.

You see, pivoting is part of the game and should be embraced whenever the need arises.

5. Thinking too small

In his book titled 18 Mistakes That Kill Startups, the founder of Y Combinator, Paul Graham, said some entrepreneurs, it’s safer to focus on small market size to avoid stiff competition. However, he pointed out that “if you make anything good, you’re going to have competitors, so you may as well face that”. Therefore, the only way to avoid competition is to come up with terrible business ideas.

6. Excess external influence

Criticism or advice, getting feedback from external sources is usually a good idea. Some startups are thriving today because of input from a friend, family member or an early adopter.

However, when this feedback comes from multiple sources at an alarming rate and unsolicited, it may become detrimental. The founder would just wake up one day to find themselves in a startup they have no clue what it does. That’s because, over time, they have allowed diverse opinions to distract them from the original vision of the business.

No, this is not the same as pivoting. And well, the difference is – pivoting is an intentional decision. Instead, what we have here is different opinions unconsciously take you away from your original goals and vision.

7. The hiring process

The importance of having the right team cannot be overemphasised. The two significant areas where entrepreneurs tend to get it wrong with recruitment are the timing and hiring the wrong people.

Bringing in too many people at the early stage of the business, as mentioned earlier, may drain the company pulse. Similarly, hiring people who don’t share the same vision as you for the company will negatively affect the business success.

Here is how you can build an excellent team for your startup.

In Conclusion

Other 5 notable mistakes startups make include:

  • Excess fear of failure
  • Inadequate research
  • Not investing enough in marketing
  • Not setting up a proper legal structure
  • Undervaluing products or services
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Quick Summary

Prefer the short version? Here is a concise recap of the key ideas in this article.

Maybe you have the mental picture and vision for the business, but do you know the practical steps to make all of it a reality? “Everybody needs somebody”, but some startup founders overlook this vital point and later come back to blame themselves. Starting without a Business Plan Having a solid business plan plays a crucial role in determining the success of a startup. Hence, establishing a startup without a business plan is as good as embarking on a journey to a new place without a compass (or Google map). Here are some critical questions a good business plan must.

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  208. I love your blog.. very nice colors & theme.
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  234. Oh my goodness! Awesome article dude! Many thanks, However I am experiencing issues with your RSS.
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  237. I have not checked in here for some time as I thought it was getting boring, but the last several posts are great quality so I guess I’ll add you back to my daily bloglist. You deserve it my friend 🙂

  238. Wow, superb blog layout! How long have you ever been running a
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  245. Let’s be honest: the meals delivery market isn’t simply “rising”-it has essentially re-engineered how folks work together
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  247. naturally like your web site but you have to check the spelling on several of your posts. Several of them are rife with spelling problems and I find it very troublesome to tell the truth nevertheless I will certainly come back again.

  249. I haven’t checked in here for some time because I thought it was getting boring, but the last few posts are great quality so I guess I’ll add you back to my everyday bloglist. You deserve it my friend 🙂

  251. Hello just wanted to give you a quick heads up. The text in your content seem to be running off the screen in Firefox. I’m not sure if this is a formatting issue or something to do with browser compatibility but I figured I’d post to let you know. The style and design look great though! Hope you get the issue resolved soon. Kudos

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