What are the biggest mistakes startups make?


Falling in love with their solution, not the customer's problem.

Answered 9 years ago

Hi there,
I had 3 startups until now and here the mistakes I would have loved to avoid in my first startup:

- Hoping all will be 'just fine'.
It simply won't. Statistically you will fail. The sales you hoped would explode will not. So plan for small milestones, small successes on the way to big success. Don't plan to sell 1 000 products, plan for the first 10 and define what are the next steps to get to 1 000 after you sold the first 10.

- Spending big money before qualifying a Minimum Viable Product in front of consumers and the trade.

- Being dependent on long production time or high minimum order quantity. I was dependent on both, they forced me to produce A LOT of stock, which I didn't sold profitably at the end.

- Having high production costs for each product.
This capped the free sampling we could do with key influencers and celebrities.

- Having a high number of SKUs (product's shapes and color combinations). This increased the complexity and put pressure on the level of stock we had to have.

Naturally, even in my first startup we did many things right, like Branding, creating a product people wanted, the PR campaign, building an automatic logistic and shipment platform...

If you have a startup and want to talk more/ would like a mentor, give me a call. I'm currently mentoring 3 startups.

Answered 9 years ago

I work in online advertising and meet with a large number of new startups. The most common problem I have observed is a lack of solid business plan and/or revenue model. Often theses startups will come in and ramble on about their idea and how it will change the world but they haven’t really thought about it from a business standpoint. How are you going to produce the product? How are you going to market it? How are you going to make a profit? What does the competitive landscape look like? How will you attract investors?

Sadly, many of theses startups are already into their business and haven’t answered these questions. Many of the founders have quit their jobs and began burning their life savings. Money goes fast in a startup, especially if there is no practical revenue model. My suggestion is to throughly vet your idea internally. Figure out how you will make money and come up with a good plan for getting to market. I would also suggest finding some experienced advisers and mentors, people with business experience to review and provide feedback on your plan before you get started.

Answered 9 years ago

I wrote a blog post about this recently, in fact, 5 lessons that start-ups would do well to listen to, regardless of what their business is:

1. Be clear on your mission

You’re going to be working long hard hours on this project so you’d best have a compelling “why” for doing so. Are you in it for the money? Are you passionate about solving a particular problem? Do you want to reach millions of people with your offering? Having a clear vision, a fundamental objective as to what you’re ultimately trying to achieve, will keep you going when things get tough but just as importantly it will help you to make decisions on how to run your business. Having a bigger sense of your company purpose will also help to attract and retain motivated employees, as well as customers.

2. Focus

By definition, you’ll have limited resources when you’re first starting out – you’ll have a small team, a tight budget, and most of all you’ll have a limited amount of time. You may have grand ideas of all the different uses for your product, all the different customers who could benefit, all the different channels you could market through… but you simply won’t be able to do it all. Strategy is fundamentally about CHOICES: do you do this or that? target this consumer or that consumer? Having a clear mission should help you here: what do you value above all else, is it making as much money as possible, doing good, reaching millions…? whom do you ultimately want to serve? what do you want to stand for? Then prioritise your activities accordingly.

3. Know and understand your customer

Something else that will help you to focus your resources is an understanding of who your ideal customer is. What are the insights you’re tapping into? Which problem are you solving? What do you know about their behaviour? Where are they active and when will they be receptive to your message? Again, you can’t serve everyone and you certainly can’t market to them all. Technology now allows you to get hyper targeted – but for this to be effective you have to know whom you’re targeting! You won’t be able to afford expensive quantitative research, so think creatively about how you can get the information you need. Look at the general trends in your target demographic; imagine yourself in your customer’s shoes; look at your web analytics or send out surveys to understand the behaviour of your current customers; go out into the street if you have to.

4. Create value for that customer

There are bound to be others doing something similar to you, if not today then some time soon. What makes you stand out? What’s your unique selling proposition? What are your points of difference versus your competitors? Describe in one sentence why your customer should choose you over all the others. And by the way, this proposition can never be about money, you should never try to compete on price. Instead, think of the value you’re creating. What are you doing that no one else can do as well as you can? What does your brand stand for? Are there particular customer segments that will favour you over your competitors? How can you deliver more benefits at a lower cost (but not a lower price)? How can you make the customer experience extraordinary?

5. Know what you don’t know

This is perhaps the red thread that runs through all of the previous points. You and your co-founder(s) will be coming from a particular background and you’ll have certain skills and strengths where you will really excel. Recognise where you lack the required experience and find the people who do. If you try to micro-manage the business and your people and you’re putting far too much pressure on yourself to do everything, you probably won’t do any of it very well (or it’ll take you a lot of time) and it’ll never be scalable. You’ll be much more successful if you delegate to someone who knows what they’re doing and free up your time and energy to focus on the things you are good at.

Get in touch if you have any questions!

Answered 9 years ago

I wish I had assembled a versatile and complimentary team a little sooner! I was trying to do it all for a very long time as I was set on bootstrapping (still a big believer in that) but I have since learnt that there are definitely ways to partner with professionals and not break the bank. There is so much to do and so much to learn that I could have leveraged my time a whole lot better! My advice - focus on doing what you know how to do best and delegate the rest to trusted partners and professionals - don't kill yourself over trying to create Powerpoint slides!! :-)
Best of luck - it's an awesome adventure!

Answered 9 years ago

Thinking of spending big like any large corporates for Infrastructure, People etc., Without the Sales coming in you can't burn the cash which is in your hand (if you have limited resources).
Startup is like a baby need to be treated with utmost care and needed to feed/care what is required to grow best.

Answered 9 years ago

The topmost factor that can lead to a startup death is lack of idea scalability. It happens when you move on without doing enough research before building up your business idea. Next slip-up that failed startups have committed is the lack of focus. This is the common mistake made by all the growing websites that shut down sooner or later. As a startup business you need to understand, It doesn’t matter how large or small your business is, during initial phase, progress will come at a snail’s pace.

I will recommend you guys to read this awesome post written on startups:

Answered 9 years ago

Underestimating the time, effort, sacrifice and passion required to reach success.

In the end, your success will come from these factors, not from the brilliance of your idea. Most truly successful startups have ideas that seem pretty straight forward in is the execution and persistence of the founders that creates the success.

Answered 9 years ago

Poor choice of domain name.

Startups may make bigger mistakes. But that's the big mistake I most frequently see.

Cutting corners on the domain is not without cost. Frequently the company will pay very large sums of money to upgrade later. Why do they change their minds later? They leak traffic, lose money, and miss opportunities.

Frequently the cost to obtain the desired domain later on (after VC funding) is much higher than it would have been if the startup had locked down the domain early on.

And sometimes the optimal domain turns out to be unobtainable, forcing a startup to change horses in mid-stream with a rebrand that eats up time and marketing resources.

Really, it is often possible to secure an excellent domain without paying a fortune up front. Startups have no excuse, in my opinion. Just inattention or short-sighted haste.

Plan ahead, guys. Your brand name / domain isn't just a place holder.

Answered 9 years ago

Having their leaders fall prey to Entreprenurial A.D.D for one and not hiring business consultants with actual knowledge.

Answered 9 years ago

1. Underestimating their costs
2. Overestimating their value
3. Losing focus and dreaming too big instead of getting one thing right
4. Not knowing when to ask for help

Good luck

Answered 9 years ago

many people are fail in a start up
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Answered 5 years ago

Good question (because if you know why startups fail, you could minimize - not prevent - the risks of failing for the same reasons).
The best answer (to most questions) is the one based on data (not opinions) as the famous/funny quote goes: "I believe in GOD, all others must bring data". Therefore 'My' answer is based on research done by CBInsights in which they reviewed 101 postmortems of startups that failed and then deduced the top 20 reasons. Here's the link:
Here's the top 10 reasons:
1. No market need.
2. Ran out of cash.
3. Not the right team (I would put this as #2 - opinion based on working with over 100 startups).
4. Get outcompeted.
5. Pricing / cost issues.
6. User unfriendly product (I would move more down the list)
7. Product without a business model (I would move this to #3)
8. Poor Marketing.
9. Ignore Customers (I think this is very similar to #1)
10. Product Mistimed.
I'm happy to help on any other issue you might have
Best of luck

Answered 5 years ago

Morihei Ueshiba once said Failure is the key to success; each mistake teaches us something. I believe that there is nothing like a big mistake or a tiny mistake, but a series of mistakes that leads to downfall of a start-up. So, let us look at the series of mistakes one-by-one:
1) Skimping or over thinking your business plan: It is said that you need to create a business plan when you are considering opening a company. If you go into a bank asking for a loan, they will ask about your business incorporation and business plan for them to look over. They will want to look over your business plan to ensure that you established how your business is going to make money and how much is projected to be made. You might believe that this is the only information that needs to include in your business plan then. Not at all.
Your business plan needs to cover your entire process, from your management team to your marketing strategy. This helps to identify if you have the right strategy in place to make the money you have projected. You cannot tell a bank that you plan to make $100k your first year of business but you have no marketing and sales strategy. What you want to accomplish is not realistic without having these two strategies being in place.
Even if you are not seeking a loan from a bank, you will still need to create a business plan to guide your actions. You do not want to just being doing things that do not lead to your business growing. Therefore, your business plan helps to identify your goals and objectives and explains how they will be accomplished. This gives you an exact plan of action to follow so that you are operating with a purpose.
Just do not make the mistake of over thinking your business plan. Your business plan does not need to be 100 pages long, covering every exact detail of your business. This only leads to procrastination because you are trying to make your business perfect. No business is perfect. You will deal some mistakes, but the biggest mistake is not having a business plan before starting your business. All you need to do is outline your strategy, not write a business book.
This is the information that should be included in your business plan:
a. Vision — the model you are working towards when developing your business.
b. Background — why you can operate the type of business you are starting.
c. Goals — targets your business needs to hit to be considered successful.
d. People — the background and experience of the people who will help you build your business.
e. Products — the type of products and services you plan on offering in the marketplace.
f. Competition — the other companies you are competing against and how your business will differentiate itself.
g. Marketing — the strategy that will be used to effectively communicate to your target market.
h. Funding — the source of financial investment that will be used to start and operate your business.
i. Measurement — the progression of your business to ensure it is moving along as planned.
j. Exit plan — the plan of how the business will continue after you have exit or sold your business.

2) Trying to do a start-up alone or having too many founders: No one builds a business alone. Even if you do not have employees, you will have some other type of support that helps you take care of different functions within your business. Making the mistake of thinking you can do everything on your own will humble you quickly. It is impossible to handle every single function of your business while trying to build a successful business at the same time. You will find yourself burned out quickly trying to do so many things on your own. If you cannot afford employees starting out, try to bring in a partner who can assist you with running your business. This allows you to split duties between one another so that you are not burden by doing everything yourself. Another mistake that should be avoided is bringing on too many founders. There are too many people who must agree on deciding, which makes it hard for your business to grow. There are also too many egos involved, as individuals may want the business to be operated by their standards. It is best to avoid this confusion by only bring in two founders at most.
3) Trying to force a business that is not working: The reason your business is not working is because you have not done the necessary market research to validate your business. If consumers will purchase your product or service, just because you offer it is a very grave mistake. You will end up wasting time and money on a business that has no chance of succeeding. No matter how hard you try to market and sell your business, it will not overcome the fact that customers are not interested in your offer. This is why it is very important for you to get feedback from your target market prior to starting your business. This process allows you to find out what your consumers do want and do not want regarding products or services. This helps you avoid creating something that would not be purchased, and instead create something that has real demand. Do not make the mistake of seeking validation from family and friends. They will tell you your business idea is great just to make you feel happy. You need real criticism rather than fake praise to ensure your business idea is worth pursuing. Only trust the opinions of those who have operated or currently operate a business. And especially trust the opinion of your target market.
4) Lacking focus and identity: When you are starting a business, you will need to be completely focused on building it every single day. Even when you are tired and stress, you should never abandon the process of developing your business. When you constantly stop and restart, you lose the progress you had going, and it is sometimes hard to recapture that energy/. Not to mention, when you stop working on your business, your competition is still moving along with developing their business — acquiring the same consumers you need to be a customer of your business. Being an entrepreneur means that you must give up average behaviour that most people operate under. You will literally have no days off when starting your business. The weekends are not weekending anymore. They are your workdays. You will almost have to work 24/7 to get your business off the ground. But this is the type of commitment that is needed if you plan to build a successful business. You also need to determine what your business stands for so that it guides your actions. These are the core values in which your business operates under. Establish these values so that you know the exact standard that your business upholds. Even if you do not have employees, your values will be a constant reminder to you so that you stay on task.
5) Being rigid about your idea: Do not become so stuck on your idea that you are unwilling to bend a little to ensure your business is successful. Having the “my way or no way” attitude does not work in entrepreneurship. Sometimes the initial idea you had just will not work. When this is the case, you must be willing to pivot to move your business forward. Being stubborn will only make you lose money and time trying to push forward an idea that has no chance at succeeding.
When your original idea will not work, you need to determine what is the best course of action to take to make your business successful. There are many successful businesses today that pivoted from their initial concept when it proved unsuccessful. They either placed their idea in a new market or redesigned their concept so that it would be demanded by their target customers. But the only reason success was gained the second time around was because they were open to moving away from their first idea. Therefore, you must be willing to let go of what does not work.
6) Underestimating financial requirements: Never start a business without knowing how much money will be needed not only to start the business but to also keep the business operating. So many businesses fail due to not understanding their required finances. They may take on too much overhead without having the customer base to support their expenses. Or, they may have a lot of revenue but remain in debt because their expenses are so high. This is why it is very important for a business owner to understand the financial requirements that is needed to keep their business operating. Without this knowing this information, you will be wondering why your business bank account is in the negative every single month. You should list out all your expenses associated with starting and operating your business. Get rid of all expenses that not needed immediately so that you cut down on your costs since you have little to no money coming in as a new business. Then you will need to determine how much money needs to be made and how it will be made. This gives you a target to meet hitch becomes your priority. This way you are not sitting around waiting for customers to find you. You are going out to find customers so that your business can start making money.
7) Not asking for help: Do not be so prideful that you cannot ask for help. It makes no sense to be stubborn trying to prove you can figure everything out on your own and your business fails as a result. You have never operated a business before and your business classes in college do not prepare for the real experience of being a business owner. Therefore, it is wise to seek advice and counsel from those who have the knowledge and experience that you do not possess. When you are just starting your business, you will want to get a coach or mentor who can help you avoid making costly mistakes. If you cannot afford a coach, get a mentor. Mentors are people who have vast experience in business ownership and are willing to share their knowledge with you. It is advisable to get more than one mentor. You want to soak up as much knowledge as possible from many different people so that you are guaranteed to be successful. The more you know, the higher your possibility of success increases.
8) Spending too much time on product development, and not enough on sales: Yes, you want to have the best product possible before offering it in the marketplace. But the more time you spend on product development, the less money you are making. In fact, you are not making any money at all because you are trying to make your product perfect. Stop trying to make the perfect product. You will not know how great your product is or not you do not have customer purchasing the product. You need to be focused on sales. Sales is how you keep your business operating and is how you eat. Even if customers have issues with the product, you can improve t while still selling. The sales process is not only how you bring in money, but it is how you learn to make your product even better. This helps to increase your sales as a result. But none of this can be accomplished if you are not making sales a priority.
9) Failing to recognize the gap between sales and profit: Do not make the mistake of thinking $50k in revenue is the same as $50k in profit. Not at all. Profit is what is left over after you pay your expenses. Therefore, if your expenses are high, you will have a low profit, if any at all. This is why it is important to reduce your expenses as much as possible so that you are earning a profit when on your sales. You do not want to be one of those businesses that has a lot of revenue coming in, but they are not making any money as a result of their expenses.

You increase your profits in two ways. Either you earn more money, or you eliminate your expenses. It is best to do both so that you are earning and keeping as much money as possible. This allows you to continually invest in your business, and at the same time save money in case of an emergency. Profit means that you have cash on hand to be used when needed.
10) Settling for good enough instead of pushing for ideal: When you are just starting your business, you will need to settle for where you are currently at so that you can acquire customers quickly. But, as you continue to develop your business and grow your customer base, you will need to improve the value you are offering. If your business is only good enough or mediocre at best, you will soon find that your customers are abandoning you for your competitors who offer a better-quality service. You want to always find ways to improve your business. Even when you believe it is good, look for ways where it could be better. This helps you build a business that completely satisfies the needs of your customers. When you are providing them with a value that cannot be found anywhere else, it will be extremely hard for them to leave and find a better business than yours.
11) Seeking confirmation for your actions rather than the truth: When you want praise for your actions rather than the truth, you will find that your business is not as great as your really think. It is better to receive real criticism instead of fake praise. Criticism is feedback that should be used to better your business. When you know what you are doing wrong, you correct your behavior and build a better business as a result.
12) Entering a market with no distribution partner: If you have a product, you will need to have distribution channels in place that allow your product to get to your consumers. Therefore, you need to have distribution partners who help you get your product in front of your customers. What is great is that online marketplaces such as Amazon and Ebay allow you to sell your products online. You can also create your own e-commerce website to sell your products. You just will need to know how to generate the traffic to your website for your e-commerce store to be successful.
13) Trusting experts, rather than your gut: Even if people are considered experts, you will need to trust your gut if your instincts say something is right or wrong. You will regret making a decision that you knew was not the right course of action for your business, but you considered the expert’s advice over making your own decision. At the end of the day, your business is yours, not the expert who you are seeking advice from. They are not affected by the decisions made for your business — only you are.
14) Hiring for convenience rather than skill requirements: Do not hire employees just to say that you have people working for you. You need to only hire people who can help you move your business forward.When you hire the wrong people, they can destroy your business because they are not invested in the success of your business — they just want a paycheck. Hire those people who believe in the vision of your business and who possess the skills that you do not have but are needed. This will give you employees who are committed to the success of your business and who play an active role in making the desired success a reality.
15) Not maintaining relationships: You need to develop and keep relationships with the people that you meet. You never know who could help your business due to their own relationships. The people who you know could introduce you to a high paying customer or a distributor who could place your products in thousands of stores. Therefore, it is especially important to maintain and nurture your relationships. You never know the value your connections can provide for you.
Besides if you do have any questions give me a call:

Answered 4 years ago

The biggest mistake most people make when starting ANY project - business or otherwise - is not having a CLEAR PLAN.

Excitement is usually the driving force behind a startup. This is important BUT it must be strongly tied to a CLEAR PLAN.

And this is the KEY to remember when it comes to a plan.

The #1 purpose of a plan is so that you (and all key people involved) have a CRISTAL CLEAR IMAGE in mind about what you are creating.

If you cannot 'see' something - then you will struggle to create it. And the clearer you can see something, the easier you will be able to create it.

The #2 purpose of a plan is to use it to share your ideas with others so that they can SEE what you are wanting to create.

Answered 9 months ago

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