In a previous article, we broke down five common mistakes that entrepreneurs make when starting a business. The fact that nine out of 10 startups fail is evidence of the fact that it is not easy to be a successful entrepreneur, and investing in a startup is just as risky.
Of course, every entrepreneur is different, and so is every business. Therefore, there are more than five mistakes that can lead to a startup failure. Here are five more mistakes that savvy entrepreneurs manage to avoid when starting their own company. The more you know about them, the less of a chance you will make them.
Following your gut may work for some situations, but not here. Follow the data. Consider running experiments or hiring a focus group to track how much it costs to acquire each customer—and if small tweaks make that cost rise or fall. Also, evaluate how your product fits in the market before launching it.
Entrepreneur Jennifer Spencer lists several signs that your idea or product is simply no good:
Are you a control freak? Severely type A? Rather than give up control and trust others with responsibilities, do you try to do everything yourself? This will inevitably lead to failure.
Adrienne Cohen, owner of business consultancy, Silverman Advisory, tells Forbes:
“‘You have to trust your judgment that you’ve employed the right person to do the job you need them to do… And that person has to feel they are trusted to do their job, and confident in being able to ask for your help and advice when they need it.’”
A good entrepreneur trusts their team members and delegates the tasks that they are not the best at, like bookkeeping or website design. This leaves more room for other tasks that promote growth.
Struggling entrepreneurs think that if they can raise enough money to reach their next round of financing, their problems will disappear. A startup with too much capital and no business model will quickly go belly up.
Ethan Kurzweil of Bessemer Venture Partners believes that over-raising capital causes startups to skip the essential moments that strengthen the company and their product or service. He states, “Startups sometimes avoid nailing product/market fit because they have the capital to overspend on customer acquisition—fooling themselves into thinking the fit is there. Sometimes, product/market fit is achieved, but the team never figures out go-to-market.”
Make sure to budget for sales that take longer than expected. Startups don’t have the money or resources right away to grow their business and market their product in the same way or at the same rate as larger companies. Organic growth takes time, so successful entrepreneurs take into account the time needed to do research or marketing.
Nobody wants to be known as a failure. But if your startup attempt fails, don’t see it as a failure, but rather as a learning experience. If fear of failure interferes with your mindset, chances are you won’t take risks. Yet the life of a startup is about taking daily, calculated risks. Don’t be scared to fail. Once you learn to overcome your fear of failure, you will be able to guide your company in the right direction and become one of the successful entrepreneurs.
[Editor’s Note: To learn more about this and related topics, you may want to attend the following webinars: Turning an Idea Product into a Business and Raising Capital: Negotiating with Potential Investors. This is an updated version of an article originally published on August 15, 2016.]
Perhaps the youngest person to ever write for Financial Poise, Matt Niksa was an editorial intern with the Company during the Summer of 2016. Prior to that he was a contributing writer for AOL and Medium.com, and subsequent to his time with Financial Poise Matt was a correspondent with the Palo Alto Daily Post.
Please log in again. The login page will open in a new tab. After logging in you can close it and return to this page.