Top 4 Mistakes That Start-ups Make and How to Avoid Them
Ready for a mental exercise? Let’s say you have the funds to get your business to a flying start. But somehow, you mysteriously stumble. You’re not the only one. Statistically, 90% of start-ups fail, regardless of their projects, funding, media hype they create and the like. So, how do you get out of this fix? That's exactly what you’re about to find out (if you read this article to the end) as we reveal 4 of the most egregious mistakes that start-ups make and how to avoid them.
4 common start-up mistakes
Most start-ups want to impress potential partners, future employees, collaborators, etc. So, one of the typical start-up mistakes is spending a significant amount of the hard-raised capital on non-essential things like fancy offices and lush decorations instead of investing in top talent, a provident fund for employees or a SIPP (self-invested personal pension) scheme, for example.
How to avoid it: Before you even think of renting or buying an office, think about the benefits that would bring to you and your employees. In the digital era, pretty much every task can be easily handled remotely - even managing teams. So, why not keep your operations in the digital space? (At least in the early years). Many applicants may find that incentivising. Food for thought.
Being a one-(wo)man show isn’t easy. There’s only 24 hours in a day and you have to brief suppliers, place orders, handle deliveries, and…make sure your clients are happy, keep your books in good order, shall we continue? Clearly, if you continue like that you’ll lose more than your mental health in the long run. So, you start hiring people. And when the funding starts rolling in, you start mass-hiring from COOs to CMOs and heads of department heads without having a clear plan laid out. What do you expect these professionals to do? They can contribute their vision to your mission provided that you map it out together with them and then take a step back and let them lead the processes, and decide on the structure of their teams, skillsets required for each team member, and KPIs. Otherwise, if you want to retain all the decision power and enjoy the audience, it’s all for nought.
How to avoid it: Take some time to prepare a recruitment strategy/plan. When hiring, focus on factors such as cognitive diversity, company culture, skillsets, opportunity to learn, evolve and upskill. It will save you more money than you actually invest in hiring top talent. More importantly, don’t let your new recruitees figure things out on their own because “that’s why you hired them”. It doesn’t work, not because they need to be spoon-fed but because chances are their way of figuring things out will be very different from yours. Unless you want to end up firing them in a couple of months, make sure you give them the attention they deserve to help them help you further down the growth road.
Engaging with the wrong investors
When setting out on the business road it can be tricky, especially from the fundraising perspective. Remember investor pitching is a two-way road. Don’t be the “Yes Man” just because you need the funding. That can cost you more further down the line.
How to avoid it: While you need financial support, don’t let it blind you or make you compromise your vision just because “you need the money.” Instead, be selective and cherry-pick your investors based on their alignment with your vision not only the depth of their pockets. Joining networks such as Fundmypitch can help you do just that. This type of networks can help you engage with angel investors and see your business through their eyes. In turn, this will help you realise whether or not they understand or even align with your vision or business idea at all.
Bringing together investors and start-up founders, Fundmypitch is your gateway to the “wild” and exciting market and learn where you fit in. From seed funding to general business advice and marketing strategy building, we give you the lowdown on how to lift your business off the ground and take it to the next level.
Giving too much power to your clients or none at all
Your clients are your most valuable asset and in today’s ultra-competitive environment, a few bad reviews can ruin your brand for good. It’s vital to let consumers have their say and be open to feedback, as this is how you improve. But can you really please everyone? Umm… no. Besides, not all upgrades appeal to all users, and soon you’ll find yourself caught in a flurry of bad reviews that you won’t be able to tackle in a week.
The other extreme is not listening to your clients at all, not running polls, designing your products and services in “your image and likeness” and expecting record sales. While this approach may work on a narrow segment, chances are the great majority will pivot to other more accommodative brands. So, what started as a breakthrough idea will fail.
How to avoid it: Don’t let clients bully you. Do take their complaints and suggestions seriously, but never let them threaten your reputation. Address all negative comments in a timely fashion; however, try to take the conversion privately and iron out any negativity. Keeping your online reputation intact is vital for your brand’s success online and offline. Ready to talk business?