More than 50% of US companies fail in the first five years of doing business. There are plenty of reasons for this to happen, some of them being a lack of funding, big market changes, lack of talent, etc. Other than these big and valid reasons, failure is sometimes caused by a series of minor errors made by entrepreneurs. Tech startups often face these problems, because they are usually run by engineers, who aren’t as capable in the fields of marketing, finance, law, etc. In this article we’ll deal with startup mistakes that look like minor ones at first glance, but can easily disrupt business in the long run.
Being the Only Founder
It’s a fact that most entrepreneurs want all the money and fame for themselves. On the other hand, being fully responsible for a startup’s development is too much for any individual, even for business moguls like Elon Musk or Steve Jobs. That’s why all successful startups were launched as partnerships. Startup development requires lots of knowledge in many different niches, from tech and accounting, to marketing and human resources and it’s really hard to find people that versatile and omniscient.
Good news for entrepreneurs who have great ideas and are implementing them alone, is that it’s never late for them to find one or several partners who will boost their startup development process. People with great ideas find partners easily, in life and in business.
Raising Less Money Than Expected
This is not a mistake per se, but it usually happens when entrepreneurs don’t approach investors in the right way. Collecting less money than expected can easily cause startups to fail, which creates a bad name for the entrepreneur in investment circles, because those who did invest their money will feel betrayed.
It sounds funny, but the process of finding an investor is very similar to dating. Entrepreneurs emphasize good sides of their product and make it likable to people owning the capital. Only when dating, people don’t bring elaborate business plans to romantic dinners, and this is one of the major criterions for finding an investor. Since this document is so important, it is advisable for entrepreneurs who are not good in putting their ideas on paper to hire business plan writing professionals for this task. Crowd (soft) funding has also become popular in recent years, and it is a great way for entrepreneurs to collect the rest of the money they need for launching their business. Launching crowd funding campaigns is a little bit different than approaching business-minded investors. Social responsibility of a startup idea should be emphasized to the maximum and the presentation needs to be likeable to the (internet) masses.
Sacrificing Users to Profit
Some entrepreneurs tend to view their startups as money making machines, which leads to overcharging services and products and neglecting client preferences. This practice can result in poor customer satisfaction and loyalty, and clients will inevitably start looking for better conditions somewhere else.
Each startup needs to be profitable, especially during its initial funding cycles, but creating superb user experience and fairly pricing company products and services should be the number one priority for entrepreneurs in all phases of startup development. Customers can be lured back by lowering prices, offering special discounts and putting customer experience on top of the priority list.
Not Embracing Employee Agility
Employees need to be inspired from time to time, by career advancement opportunities, bonuses and many other benefits that they can earn with hard work and dedication. One of the greatest ways to boost employee productivity is to give them bonuses that will be directly related to their effort. In the sales department it would be a percentage of the sales, while in the development department an added bonus will relate to fixed problems and finished tasks. Another very inspiring but not that common way for entrepreneurs to reward their top employees is to give them a certain percentage of company shares. This way employees will be more agile, since the possible dividend that they might get in the end of the year will directly relate to the results of their work.
A great way for entrepreneurs to fix most of their startup company’s problems is to hire a business coach that will advise them and analyze the company’s growth and performance. On the other hand, entrepreneurs that are more into DIY and learning through problem solving will enjoy making business strategies and plans themselves, but even they can ask some good coaching questions and get advice and answers from top business coaches that will help them develop their startup into a multi-million dollar enterprise.