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April 21, 2016

Top 10 Startup Mistakes (And How to Avoid Them)

While it's a hard statistic to swallow, nine out of 10 startups will fail. Below are 10 reasons why this is the case. Some may say startups fail for one simple reason: they didn't make a product people wanted. Although this is the main culprit of startup failure, the issue goes much deeper. Join the 10 percent that succeed by digesting this list of classic startup mistakes and how to avoid them!

startup-mistakes-east-west-manufacturingImage via Freepik

   1     Making a Product People Don't Want                                                                                          

Making and marketing a product people simply don't want or need will certainly result in a failed business, even if your idea is original. If you find yourself saying, "Wow, I can't believe nobody has thought of this amazing product yet," ask yourself why that's that case. It could be that you truly have a revolutionary idea. Or it could be that others had a similar idea but, after running the numbers, realized it wasn't realistically capable of succeeding.

Our Advice: Rather than focusing on making a cool product, ask yourself what problem or pain point consumers are experiencing and how your product can solve the problem. Success lies in solving your customers' problems. Don't assume people will bite. Know they will.

   2    Not Conducting Adequate Market Research (Or Ignoring the Results)                            

Launching a startup without numbers to back it up is like jumping out of a plane with no parachute -- it can't end well. Also, good luck convincing investors to fund your company without solid numbers and projections proving that success is more than a mere hope. Even if you manage to dodge point one by making a desirable product, if you don't know your market, sales won't happen. Numbers don't lie. Always remember this!

Our Advice: Invest in research. Hire a professional. Do your due diligence and don't say, "I have a feeling this will work." Hunches are for hopefuls. Hard data is for achievers.

   3    Going It Solo                                                                                                                                       

There's a good reason the most successful companies have co-founders, or at least extensive teams of experts steering the ship. Trying to change the world on your own is a daunting task, and launching a startup solo isn't much easier. When times are good, knowing you built the business from the ground up single-handedly might serve as an ego booster, but what about when times are tough? It could be too much for one person to tackle. 

Our Advice: Don't let your pride get in the way, and don't get hung up on saving money and attempting to be a jack of all trades. We can't all be amazing at everything (and if you think you are, you may need a humility check).

   4    Hiring the Wrong People                                                                                                                 

Alright, so you understand you need a team. That's step one! Step two is selecting those team members. This is where many novice businesses falter. In addition to finding skilled experts to fill positions, hire people you feel are trustworthy, who you get along with, who mesh well with the company culture you have in mind. If you start off with doubts, chances are there's a reasonl. You need to trust your team members to play a major role in the development of your company (your baby) and feel confident delegating tasks and relinquishing some control to them. As a fellow control freak, I know this is easier said than done.

Our Advice: Back to the subject of pride: If you don't know what you're talking about, be honest with yourself, and enlist the help of someone who does. Don't know what skills to look for in a good app programmer? Find someone who does, and get their input.

   5    Not Committing                                                                                                                                 

If you're truly dedicated to this endeavor, you'll put your all into it. This may or may not mean quitting your day job. (This is not an endorsement to quit your day job.) Once you've done your research, have the business plan drawn up and interested investors are lining up, you've got a big decision to make. Go all in, or abandon ship. There's really no in between if you want to come out in the 10 percent who survive.

Our Advice: Have an honest chat with yourself and with those close to you. If you aren't excited, dedicated and willing to take some risks, this may not be the right time (or the right path at all). Make sure you're all in before pushing start.

   6    Not Thinking Long-Term                                                                                                                   

Short-sightedness equals failure, period. While it's true that you could find short-lived success with only a short-term plan, that model is simply not sustainable. Not to mention what your investors will say! They will expect to see 5-, 10-, 20-year plans in place. Visions. Projections. Real numbers. Don't assume you'll figure it out as you go. Sure, the plans will likely change, but you need plans in the first place. 

Our Advice: Think beyond a product. Consider your users, how they'll interact with your product, what they'll expect from your brand, what they'll want next and how their tastes might change. Also consider what technologies are on the horizon. What's the next platform, gadget or lifestyle shift? What are your competitors doing? What do they already have in the works? Whatever you do, think big.

   7    Not Knowing How to Engage                                                                                                           

Great, you designed a product that solves a problem, and you did it well -- better than the competition. You've got the funding. You've got the 20-year plan. You know who your audience is. But you don't have a clue how to reach them. This means your product doesn't sell, and your startup fails. 

Our Advice: You need more than the basic market research. You must intimately understand and connect with your (potential) customers. Hire a team of marketing experts and take customer service to the next level (i.e., Zappos level). Once you figure out how to attract customers, drill down on how to keep them engaged, happy, coming back for more. Understand their wants and needs, and let the customer guide your moves. Again, the key to success is solving your customers' problems.

   8    Not Being Flexible                                                                                                                             

There's a fine line between being dedicated to your idea and being neurotically married to it. You need to find a middle ground of flexibilty -- a place where you understand the need to bend as new information or a challenge presents itself, but you aren't acting in a fickle way, allowing your idea to change radically week by week.

Our Advice: Be smart. Defend your idea when you have numbers to prove it will work, but recognize when the numbers are pointing you in another direction, whether it's a slight left or a U-turn. If you hired a team of experts, listen to what they have to say. Also consider listening to what your investors have to say. This doesn't mean you have to take all their advice, but if you trust them and they have data to back themselves up, take the time to listen.

   9    Launching at the Wrong Time                                                                                                        

The sooner the better, right? Not always. There is such a thing as launching too soon, before you have all your ducks in a row. Although it could mean beating a competitor to the punch, also keep in mind that first impressions are lasting, and (particularly on the tech scene) users can be ruthless in issuing their opinions. Make sure the time is right. 

Taking too long to launch can also break a company (unless you're Tesla). Assess your situation and what kind of progress you're making before issuing promises about release dates. The last thing you need is an angry mob demanding to know where their newest gadget is.

Our Advice: Crunch the numbers and plan, plan, plan. Give yourself adequate time to market the hell out of your product and brand and build anticipation, all while keeping an eye on the competition and what they have on their agenda. But, most importantly, tune in to what your market is saying. Are they eager? Are they ready? Is this really the right time?

   10    Not Having (and Keeping) Financials in Order                                                                        

This is a big one, and the culprit behind too many failed businesses. It all starts with having adequate funding in the first place. You need to know the cash is in the bank, or is guaranteed to show up. Don't launch with the expectation that you'll secure additional funding at some point. A certain level of risk is necessary, but sometimes risk is unwise. Once you've got the funds, you need someone to manage the account. Not a CPA? Then now is not a good time to try it out. Hire someone who has the know-how to invest and spend strategically, someone who can tell you what your limits are.

Our Advice: Don't get too caught up in initial success and go on a spending spree. Turn to that trusted financial advisor you hired to figure out your next move, when to invest in additional resources or assets, and when to err on the conservative side.

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Filed Under: Start-Ups