Inexperience is one of the biggest roadblock faced by startup owners.
They have never been the part of the drill.
And the drill is not easy to complete.
When we started our first venture, the learning happened as we moved ahead.
Like every startup, we had our share of mistakes.
Few minor. Few major. Few catastrophic.
The one falling in the last bracket almost led to the closure of business at times.
As they say “To err is human”.
In startup world “To err can lead to Business Closure”.
Rather than compiling a long list of mistakes startup owners can avoid.
I will focus on 4 common mistakes almost all startup owners make.
Here is the list:
The 100,000 USD advertisement campaign sold by the sales agent might be the best thing for your business.
You are tempted to cut a cheque of USD 100,000 to quickly get customers.
You want to win the race without toiling hard in the market.
This is where you need to ask the tough question “Do you have money to take the risk?”
What else can you do with USD 100,000 in your startup?
Most of the startups work in unique virgin markets.
Although, they have less competition to face. They have the disadvantage of playing in a market no one has ever tried.
There are no SOPs. There are no case studies.
You are the “case study”.
Startups like every business need money.
In fact, startups need “high-risk money”.
Reason being, the uncertainty involved with what you are trying to achieve.
One of my failed startups failed due to money troubles.
The team behind the startup never planned for the worse.
Our revenue targets were always miles behind our expenses.
The venture was bootstrapped.
We had to close the venture within 6 months of start.
Every single penny in a startup needs to be planned.
Don’t make hasty decisions. There is nothing called as “easy success” which you can get by splurging a million-dollar ad campaign.
You don’t trust me.
Ask PepperTap, TinyOwl, FoodPanda, localbanya.
They all Failed Miserably after spending a fortune on acquiring customers at an unimaginable pace.
Despite being funded with millions, they failed.
I hope you get the hint.
The last one year saw a lot of startups shut shop in India due to money troubles.
They spent more than they could earn.
Ultimately, when VCs refused to fund them any further.
They closed the ventures after wasting millions on advertisements to get new customers.
Money is essential to the success of your venture.
Do not do the mistake of running a startup without proper Money Planning.
Overestimating an Idea:
I hear lot of new startup owners define USP of their startup with statements
“I am building the next eBay”
“My startup will disrupt the market of Airbnb”
“We will sell gigs for USD 10 on our website. The idea will change the face of market captured by Fiverr.”
None of the above qualifies as a good idea.
First, they are all vague.
Secondly, they are all superficial at least at an idea level.
The scope of innovation through ideas does not have to rely on what other successful brands have already achieved.
For ex: You selling a 10 USD gig on your website does not even put a dent on Fiverr’s market.
You might have the best of an idea.
The idea which can change the world.
Disrupt your market space and make your millionaire overnight.
But have you tested the idea?
Did you every discuss the idea with someone else other?
Recently, I was asked on Quora “How can I protect my idea?”.
You cannot protect your idea.
Ideas are a pigment of our imagination.
At times, they can be too good to be true but most of the times, they are just imagination.
Now how do you analyze the viability of an idea?
I highly recommend startup owners take some time to build a prototype.
The prototype needs to be shown to as many people as possible.
Absorb the constructive feedback. You know what to do with trash feedback. Don’t you?
Ideas will fail you. A business model on Prototype at least decreases your chances of failure.
Never spend a fortune on an idea, you think is the best in business.
I know there are stories of Facebook, Airbnb.
The unicorn startups that started as an idea.
But how many Facebooks, Airbnb’s have you heard of?
I am not discouraging anyone here.
The purpose here is to discourage Entrepreneurs from getting blinded by the ideas they have.
You obviously need to have faith in your idea but overestimating your idea can lead to quick failures.
You just need to spend some time in research, prototyping, etc to validate your idea.
We all love our idea like babies.
And It is difficult to find flaws in our babies.
But don’t we spend a considerable time on our babies grooming them, teaching them things.
The same goes for the ideas we have.
Starting a Startups without a full-time Owner:
Recently, one of my friends discussed with me a startup they had worked on for months.
They were developing a software product they were developing for a niche market.
My friend works in a company as a full-time employee.
His partners work in big consulting firms.
He was the one, who was developing the software.
The partners were to guide him on developing the software and at some stage help him in developing and marketing the software.
The software never saw the light of day.
He was upfront about the issue he faced.
None of the founders had time to spare for the startup.
Weekdays were taxing. Weekends were for relaxing.
Where was the time to spare for the software?
I have faced the same issue in one of the startups, I worked in as a partner.
The venture was started few years back with college friends.
The problem from day one with the venture was all the stakeholders had their existing businesses to handle.
The venture was a headless chicken roaming aimlessly, trying to succeed in the difficult startup world.
It failed miserably. We lost money, time and trust in each other.
Today everyone you meet wants to start a startup.
Most of the startup enthusiasts start a startup without leaving their jobs.
Nothing wrong in that. Right?
The only point they need to consider is the time, energy, effort, money required to run a Startup.
Startups are exhausting.
You can ask any full-time Startup Owner on how much time he/she has for themselves or their family?
If the full-time owners are so busy, what about part time owners?
If you are starting a startup with an existing venture job, ensure you have enough energy to meet the demands of running a startup.
There are wonderful stories of startup owners who started with their jobs and went on to work full time with their ventures.
They spent 12 to 15 hours daily managing their startups parallel with their jobs.
if you have the will and energy to fight it till the end.
Your startup will succeed.
Hiring the Wrong Team:
There is a difference between hiring the right team and hiring an expensive team.
For startups, the right team comprises of employees who have the sense of ownership.
Employees, who are as passionate about the idea behind the startup as owners.
The general mistakes startups do with hiring a team are:
- They hire expensive resources.
- They hire resources, who are talented but are not connected to a vision of the company.
- They hire resources who cannot multi-task.
- They hire resources from MNCs. Worse, Government
Startups need to be very clear with their employees on what is expected of them.
Startups evolve with time. So do responsibilities.
Anyone, who cannot multi-task should not be hired.
Anyone, how still thinks “MNCs” are the place to be, needs to go.
The ones from government never worked there. How do you expect them to work with you? Don’t hire them.
The Government can easily afford them with another pay commission hike. Why take the pain?
Spend as much time as possible in building the right team and leading by example.
If there is a sale to be made, go yourself.
Show your sales guys that you are confident in facing the hardships of selling your novel but a new idea.
The right team can make or break your startup.
Money, Time, and Idea with the right team is what can fail or succeed as a startup.