You probably already know that, due to different reasons, about 90% of startups eventually fail. And 20% shut their operations just within the first year of business. Though starting up a business might seem intimidating, you must not st yourself from following your dreams. In this blog, we’ve compiled a list of some common startup mistakes that you should avoid if you’re planning to set up your business.
1. Not making a business plan
The biggest startup mistake to avoid in 2022 is not having a concrete business plan in place before starting your journey. You need to think of your business plan as a blueprint or a road map for your business. This plan helps you (And other people who you want to get on board with you) to understand the purpose of your startup, what are you trying to achieve, what customer needs are you trying to fulfil, who are your competitors, who are your target audience, and much more.
Having a good business plan in place significantly reduces the risk of startup failure. It does do not have to be very long or too formal. If the plan answers all important questions and gives you the necessary guidance, it is more than enough. Most importantly: Do not think of this one as another thing to check off, do it with conviction.
2. Not understanding your market, target audience & niche
Another common startup mistake is not devoting a substantial amount of time to understanding your target audience as well as the market you are trying to enter. For some tech founders, it might be easier to develop an app than talk to their customers. However, unless you don’t know who you are building whatever you are building, you won’t get any real insights or feedback. It is crucial to understand and identify that building good products isn’t enough for a business to thrive. Understanding your target audience is also improtant.
3. Not taking care of the legalities
We all can agree that getting a viable business idea is not something that happens every day. So, protecting your business and business ideas should be on the top of your list of priorities. You can use search engines like Google to check if your brand name is trademarked or not and the assets you use in your products are not anyone else’s intellectual property. Moreover, make sure you incorporate your company before the first funding round or before generating significant revenue (whichever happens first). You also want to take care of industry or country-specific licences and permits.
SEE ALSO: Here are the 6 biggest startup fails from across the world
4. Hiring too soon
Hiring full-time employees when a part-time employee is enough, or sometimes hiring itself, is a big mistake a startup can make. When you want to hire someone, make sure you understand the entire scope of work and accordingly decide if you want someone to commit full-time or part-time.
5. Hiring too late
No matter how passionate you are about your startup, there will come a time when you will feel overburdened, burned out, or overwhelmed. Startup founders and entrepreneurs need to understand that they do not need to run the entire business by themselves. It is a big mistake when they think that they are alone and don’t try to surround themselves with a trustworthy counsel. Find wise, reliable, and credible people you can depend on, discuss your strategy, progress, and challenges with.
6. Getting the wrong investors on board
When you’re trying to get an investor on board, apart from their money, their wealth of experience and vision also comes on board with them. The first set of investors of any startup will make or break it. These investors place their confidence in the potential of the startup. If you’re receiving funds from a venture capital firm, they also give you access to their resources, like a network. So, it is very important that the goals and vision of the investor are aligned with that of your startup. If not, there might be issues in the long run.
SEE ALSO: 7 ways you can use technology to keep your workforce motivated
7. Miscalculating capital requirements
Many startup founders, in order to avoid too much debt, think that they can get further with less capital. In an attempt towards minimizing equity dilution, they often forget to factor in unforeseeable delays and unfavourable challenges. Being in a habit of being positive, they tend to think about best-case scenarios. Though it is appreciable, when it comes to capital, it is best to plan for contingencies and raise a little more than what is required.
8. Not having a unique product or a USP
In a competitive market that’s flooded with so many products, only those voices of those brands would be heard who have something valuable to offer. If you don’t have a product that no one is offering, or a product with a unique selling point, then your target customers won’t have a reason to choose you over the competitor. Avoid this common startup mistake by conducting in-depth market and competitor research and asking yourself who is your competitor, who exactly do they target, what marketing methods and channels do they use, how much do they charge, what is their USP and what’s yours?
9. Pricing too low/high
Avoiding this startup mistake is tricky. Too high and not many people can afford it or won’t be willing to buy it, too low and you won’t be able to make a profit. Even big organizations are capable of getting it wrong the first time. To avoid making this mistake, conduct enough market research and understand how much people are willing to pay for your product offering.
10. Rushing to launch and/or scale
Another big mistake to avoid is rushing towards launching. “Done is better than perfect” is a saying that does not apply here. Because you need to be sure that you are ready to take on what’s coming. Once you launch, getting the public’s eye, inquiries will flood in and so will potential clients. You need to make sure everything, including all your processes and systems, payment terms, communications, and contracts, are in place. Otherwise, you risk appearing inexperienced and unprofessional. So, make sure you are truly all set to go before launching.
SEE ALSO: 10 Most active tech venture capital firms in the world
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Source
[1] Failory (2021) “Startup Failure Rate: Ultimate Report + Infographic [2021]” [Online] Available from: https://www.failory.com/blog/startup-failure-rate [Accessed January 2022]
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