Top 10 startup errors
The following review will provide a number of examples that every entrepreneur should try to avoid when starting a business. Some of the holes referenced below run parallel to bankruptcy. With this in mind, we strongly recommend that you carefully follow these guidelines. Remember, it is better to be safe than sorry. Each of you must make your own decisions based on your due diligence and other critical factors.
1) Have a founder. Startups should have more than one founder. The reason for this is credibility. Having at least two founders helps to diversify the work. It’s also nice if the founders are from different backgrounds, so they each have something different to add to the mix.
Also, investments can be difficult to launch with just one founder. With this in mind, potential investors may feel that your ideas aren’t good enough. From a psychological point of view, when you’re involved in a startup, there will be more bad days than good (yes, we know, it’s unfortunate). Having another founder support you during those days, and vice versa, is key. One of the best things about the early stages of a startup is brainstorming sessions. It is impossible to describe in words the great satisfaction of coming together as a team with the perfect solution to a problem. Avoid individualism: that kind of spirit will not get you far. Team players are key, try to stay together as one and create an environment where everyone supports each other.
2) Wrong location. The location is key. If you are located in the middle of nowhere, it will be very difficult to not only attract talent, but also the investment that will help you build and launch your company. If you have an amazing idea and plan to execute it to the best of your ability, try moving to a bigger city where there is more action. At first it will be hard to get used to a new city and all the new changes, but you can believe that it will be worth it in the long run.
Some of the best cities to start a business are Silicon Valley, Boston, Seattle, Austin, Denver, and New York.
3) Doing too many things at once. One of the biggest problems startups have is trying to do too many things at once. This creates distractions and makes you less focused on the tasks that need to be done. Don’t try to go big right away. Do something small and do it better than anyone else. Once you’ve built your initial idea, then it’s time to start adding new features. The easier you make it for the public, the better; otherwise they will be overwhelmed and not understand what you are doing.
Remember. There is nothing wrong with changing the idea you started with despite what the market is demanding of your product. Some of the best projects didn’t turn out the way they were planned.
4) Hiring C Employees. On average, it can take around 2-3 months to hire a person depending on your location. We recommend that you stay tuned 24/7 and never stop interviewing people. Talent is hard to find, but not impossible.
In the event that you are a new company involved in the technology industry, make sure that you hire the best programmers. Before you hire them, review the projects they’ve been working on, view case studies, and ask for a first-hand account from past clients. This will help you make an informed decision.
Also, we advise you to stay away from recruiters at an early stage. They don’t care about your company as much as you do and all they’re after is their 25% commission based on the annual salary of the prospect you’re trying to hire. This is too much money for a startup to throw out the window. It’s a pain to take care of HR, yet someone has to do it. After all, this is your company!
5) Launch too early or too late. If a startup launches its project too early, there is a chance that the product will not be complete and will not satisfy consumers. The main problem here is that if the project isn’t finished, it will completely shut down your users and as a consequence people won’t come back. On the other hand, you may have the problem of launching too late. This topic not only gives a bad image to the company, but since you have not been able to meet your milestones, it also creates a hole in the pockets of the company because keeping the lights on is not cheap.
From our point of view, cast when you have something solid. Don’t plan to release the absolute best while you wait for that process to complete, start with what you need and work your way up.
6) Raise more or less than the necessary capital. Startups make this kind of mistake all the time. Make sure you have developed a detailed business plan that you are constantly updating and carefully following. This business plan should be the guideline for the company when entering a round of financing. Keep track of your finances and know when you’re running out of money. Be sure to plan accordingly so that you can raise a little more of the money you need (in case of surprises) to get your business through to the next round of funding.
7) Lack of budgets. When startups raise money, they sometimes forget that money is very easy to burn. Even if you feel like you have everything covered, chances are you don’t. There are always unexpected expenses that come our way. With this in mind, we strongly recommend that you keep all expenses as low as possible. Try to negotiate every bill and go as high as you can for the sake of your company’s cash flow. Try to operate only with the necessary number of employees. Another example of wasting money might be moving into expensive office space before the company earns any revenue. There are plenty of examples of startups blowing up their bank accounts by renting out very nice offices. The moral: avoid getting an office space. If possible, make everything start from home and only move to an office space when it’s the absolute last resort.
8) Investors with a lack of knowledge and experience. Raising money is a tough battle. Dead money is the type of investment that comes from a person who does not add value to the company. A good example of this would be startups that only bring in one of their friends or family at an early stage. These types of investors will not provide the necessary impetus to have a successful start-up. This can also scare off angel investors and venture capital firms that might want to participate in a later round of funding. Another tip is not to have a large number of investors in the Seed Round (first round of financing). Otherwise, you will get too crazy with the legal paperwork in the next round of funding, and as a consequence, the startup’s attractiveness to VC firms and private equity will be severely reduced.
9) Arguments between founders. There are many examples of founder fights, which can potentially result in the loss of a team member. Try to avoid fights, set guidelines so that you never get into a situation that is impossible to handle. Make sure your startup has a healthy work environment. Remember, startup life is very difficult to start, do not add extra obstacles and always try to understand yourself. As explained in our “10 Must-Have Legal Tips for Startups” article, having restricted shares will prevent the founders from leaving the company with all the shares. Starting a company is no joke, and it is a long road ahead filled with obstacles and darkness. Make sure you have a special and trusted connection with that person you decide to share this journey with.
10) Lack of marketing. Your startup may have a unique product or platform, however, if no one knows about your product, it’s like it doesn’t exist. Be sure to spread the word and reach as many people as possible. Find out the best marketing channels to reach the right audience. Keep in mind that print media or advertisements are less effective than online resources today. In any case, as a startup, your company should NOT spend too much money on advertising.
