It took three long years to take my company from the idea stage to what it is now, and it feels like a lifelong journey. I want to share my experience and caution beginners against the typical mistakes startups make. I hope you learn something from my experience and find my advice helpful.
1. Get Things Straight From The Start
This is one of the most important pieces of advice I can give. If you are doing business with partners, it’s very important that you agree on essential issues before you launch the project. Discuss expectations, shares, responsibilities and ways to exit from the project. Make sure you feel comfortable with the agreement.
You are going to work 24/7, solve lots of problems, do things you have never done before, find balance and be creative while also being a source of motivation and inspiration for your team, your partners and yourself. If you don’t feel the conditions you are working in are fair or if the workload or money isn’t distributed equally, sooner or later, it will influence your motivation and the success of the whole project.
I didn’t entirely avoid mistakes. Conflicts concerning responsibilities occurred very quickly. Within a year, my partner left due to his personal issues. At the time, we hadn’t made any agreement on how to proceed from such circumstances and found ourselves in a challenging position.
Similarly, get things straight with investors. It’s very important to keep in mind that when outside investors are involved in the project, the company doesn’t belong to you anymore, even if you still own the control packet of shares. You will have to consider the interests of the people who invest in your project. They might turn out to have completely different goals and visions for your business. That is why it makes sense to discuss all matters in meticulous detail.
2. Test The Market
In the alpha stage of our project, we, of course, tested the market. My partner, who was living in London, did a survey. He asked all of his acquaintances whether they thought there was a need for a service like ours (an e-cleaning service). I used the internet to study competitors. This shallow research resulted in a lot of enthusiasm, which led us to say, “Let’s do it! There are no serious competitors — just minor cleaning agencies!”
We were mistaken. The market was competitive. Not only were there direct competitors with plenty of investment, but there were local agencies and a shadow economy, too.
At the time, our dream led us to believe we could easily start our business, so we failed to pay enough attention to competitors who had more money, influence and opportunities. Looking back, I think we should have done many things differently.
I read the story of a car-sharing company in Russia, which gave me food for thought. Before launching the project, the founders employed a man who had succeeded in a similar business in the U.S. in order to learn from him. They made good decisions. Their market was highly competitive, but by the time they were ready to launch, they had obtained expert evaluation and a good strategy, which allowed them to carve out a niche quickly and sell their project successfully.
Many startup founders tend to do everything themselves. It’s a common mistake that I also made. You save money on salaries for experts, and you want to study the process from scratch in order to be able to control everything thoroughly afterward. But there’s a dark side to this perfectionism. Multitasking is time-consuming, and this time should have been invested in strategy and process development rather than into client support and emails.
Delegate! Let others do what they can do, and focus your own attention on vital things such as marketing, sales and strategy. We did it vice versa: We outsourced what we should have studied and done by ourselves and performed what we could have delegated without harm.
4. Define The Key Business Dimension
Don’t do anything you can’t calculate. By business dimension, I mean those signs that will show you the level of the project’s success. You should know how many clients you have and be aware of an average purchase size, life cycle, etc. When you have tested the model and made sure you are moving ahead, start CRM. Even if you have only 10 clients today, tomorrow you’ll have 10,000, and it’ll be more difficult to implement CRM then.
Client support is one of the essential elements of our service. Initially, we communicated with the customers via MS Outlook until our company started growing rapidly and we realized we were sinking in information traffic. Only after having switched to CRM for automatic communication with clients did we realize how much time and effort we had wasted doing it manually.
5. Define Your Business’s Future
I want to emphasize what I have already mentioned: agreeing with your partners on where you are going and what you expect to gain is of vital importance. If you are a startup that is planning to develop in order to attract investors, it makes sense to find a place created especially for you: a seed accelerator, startup contest, exhibition, etc.
If you want to make the project profitable and run it yourself, you should implement a different strategy and grow slower.
However much we want to learn from the mistakes of others, we can’t avoid making our own. It’s inevitable, and we have to get through it. But if some of these tips help you to save your time or money, this article was definitely worth writing.