The startup’s arena is not for the faint-hearted. The stats just prove that fact. It’s estimated that over half a million new businesses enter the frame, but only a handful stand the test of time. 30% of these businesses sink inside the first 2 years. 50% go extinct before they’ve hit the 5 years mark. Only 25% are left standing strong after the 15 years mark.
What we can learn from these stats is that there’s no shortage of people wanting to pursue their ambitious ideas. It’s just that many of them don’t have the right method to make those ideas work. So what are those mistakes that bring these startups down? Well, Startups are about seizing the initiatives and making the most of them as time goes on, and the tempo for that is set in the initial phase, right around the first year. In fact, this phase can seal the fate of most startups very quickly.
In this blog, I’ve highlighted the 10 most common mistakes that startup entrepreneurs make in their very first year. Now, for some startups, any of these 10 mistakes could prove catastrophic, while for others, it could take a mix of 2 or more to bring the startup crashing down. Without further ado, let’s take a look at what are these mistakes and how they affect various startups:
1. Seeking The Limelight
Majority of startups are just in a rush. They want to become the next Facebook or Amazon overnight. In an attempt to bask in the limelight, there are many measures that are definitely not in their interest. Looking for mentions in blogs, articles and press coverage at and when they don’t have a clear idea of where their business is headed is an erroneous attempt. It must be remembered that once a startup comes under the public radar, its every move is put under scrutiny. A minor faux-pas becomes a cause of embarrassment and that’s something no startup is ready for. Read here how some of the most promising startups failed for arriving too early on the market.
2. Solitary Warrior
Startup means work. Lots and lots of work and a single CEO just isn’t enough for that. From time to time, you’re going to need some partner with whom you can share your opinions, split your workload and plan out strategies. Many CEOs are quite resolute about not sharing their ideas or seeking other’s help and that proves to be their undoing. If that’s you, a change of perspective might be helpful. Look for someone with whom you can work closely and lay down your partnership terms for the good of your startup.
3. Poor Hirings
Apparently, the Co-founder dilemma isn’t the only one that a startup has to contend with. The quality, skill, and mindset of employees that work in it are just as important. Since startups, staff-wise, are relatively small, small mistakes prove costly. So, it’s best to be straightforward about the employee’ responsibilities and expectations during the hiring phase. Keep absolute transparency and hire only those candidates that are willing to be flexible and work under different roles.
4. Rigid Mentality
The rigid mentality in a startup isn’t limited to the employees alone. Rigidity can happen in many areas. With founders, it’s mostly to do with their ideas and principles. At a startup, time is everything and speed to adapt can be a formidable trait. But not all startups are perfect. Many founders commit the costly mistake of persisting in their failing ways. This can bring down the morale and trust factor of the employees and evidently result in poor performance. It’s best to reassess the plans and ideas behind the business. If something isn’t working, no matter how close that is to your heart, move past it.
5. Hell-bent on networking
Networking with the advent of technology has risen to an all-new level. In fact, nowhere else is the value of networking overemphasised than in the startup world. As a startup entrepreneur, it’s easy to fall into the trap of networking, thinking networking is the solution for every business problem. Some founders spend hours and hours attending conferences, parties, and business meets just to make connections with influential people when all that time could be spent doing some actual business work. The fact remains that if you know what you’re doing and doing it right, given the size of startup communities, people will find their way to you themselves.
6. Chasing Every Other Investor
This is somehow related to the previous point. Again, startup entrepreneurs feel they have a groundbreaking and a world-shattering idea and no sooner have they expressed it, investors will be lined up to make investments in it. Seldom is that the case. Many of the successful businesses of our time have had their ideas turned down by the investors. Thinking you have to meet every investor as there’s a great chance of getting investment from them is ill-advised. You don’t have to meet every investor, just meet ones who understand what you’re trying to achieve. Read the Tips for startups finding investors here.
7. Scaling Too Early
This is a bit of a suicidal attempt. In the age of 24/7 media coverage, we have too much information on our hands and it’s quite easy to go impatient when you hear so many success stories of any number of businesses and how they made their ideas work. Soon, Impatience gives way to rash actions and you’re ready to put everything on the stake just to achieve the perfect growth at a rapid pace. From that point on, everything could start to travel downhill very quickly. As a startup entrepreneur, you have to avoid that. Look at your strengths and know what you’re trying to achieve. Based on that set realistic growth targets.
8. Getting Into Too Many Things
The most successful businesses are those that provide simple solutions for simple problems. Startups get this fact all too complicated. They start providing solutions at which they have no expertise and fall further apart from their key services. This approach is going to sink many of the established businesses into demise, startups don’t even stand a chance.
9. Surreptitious about idea
This is a bit of a controversial topic but certainly requires a comment or two. As we’ve previously discussed ideas give rise to business but ideas aren’t businesses themselves. That’s something most startup entrepreneurs get wrong. Thinking their idea priceless and too good to be shared for the fear of being robbed of it. This keeps them at distance from expert advisors whose guidance can prove to be instrumental in the would-be business’ success.
10. Chasing Perfection
This is again a common mistake and one that’s proved catastrophic for many startups. The business world is anything but easy. As a startup entrepreneur, you find yourself facing tough circumstances where uneasy decisions have to be made from time to time. There just isn’t enough time to study, analyze and arrive at the perfect decision all the time. You have to be strong and bold in your decision-making and move past the decision making dilemma in order to make further progress.
Those are the 10 most common mistakes startups make in their first year. Some get away with mild punishment, while many are left paying a hefty price for it. If you know of any other common mistakes startups make that hasn’t been included in the blog, feel free to share in the comments section below.