Every entrepreneur is prone to making bad decisions no matter their knowledge or experience. The 5 … [+]
Startup success or failure is mostly dependent on founders’ hustle, resources and decision making. While external and uncontrollable factors can sometimes play a big role in the performance of a startup, rarely will a startup suddenly fail or succeed independently from entrepreneurs’ actions.
Every entrepreneur is prone to making bad decisions no matter their knowledge or experience. The 5 common mistakes listed below are fully controllable and easily avoidable. Here’s a reminder of what can negatively affect your startup success.
1. Short-Term Success
It’s easy to score a quick win even with just an idea. Every hard-working entrepreneur can hustle to get the first paying customers just by knocking on doors and selling a vision. Furthermore, today, anyone can build a product with or without a budget. The hardest part is building a sustainable startup. Follow these general business rules:
- Start with a vision but set one short-term goal at a time.
- Break down short-term goals into small achievable milestones and celebrate the small wins.
- Be open for change.
- Understand that one startup failure is one step closer to building a different sustainable startup even if the ideas are completely different.
Here are 3 startup specific guidelines for building a product that lasts:
- Surround yourself with customers or future buyers since day 1. Let them help you build the product as if they’re co-founders in the venture.
- Virtually any idea or feature can be tested before development. Pay attention to those validation signals and avoid convincing yourself that if you build it, things will change.
- Work with the best. If you can’t afford working with the best, hire them as mentors and team leads.
2. Premature Growth
It’s easy to fake and justify startup success with resources. If you have funds, you can force an undesirable solution into a market and see a growing number of customers even if the numbers don’t add up. Many startups failed waiting for the time their customer lifetime value exceeds acquisition costs. Research shows that 70% of startups fail because of premature growth.
Instead, focus on building the foundation even if it takes years. The foundation of a startup is a product people use, recommend and pay for. Achieving those three pillars takes a series of product iterations. Once you’re there, even with just a few customers, it won’t be hard to scale to the next hundred and thousand buyers. The other way around is detrimental to a startup.
3. Hiring The Cheapest
Usually, the biggest portion of a startup investment is allocated to product development. It can be enticing to bet on a team who seem like they might be able to get the job done just because the cost of hiring the best is higher.
In reality, over the long run, the cost of hiring underqualified candidates can be significantly higher than the premium price paid for the right talent. Redevelopment, miscommunication, mistakes and slack will cost time and money.
Instead, even if you can’t hire the best, get them involved as advisors and guides to your team. Even if they don’t do the work, their leadership will increase the probability of success of your product and startup.
4. Picking The Wrong Battle
Building a successful startup is a challenging endeavor. To improve the odds of success, entrepreneurs are better off focusing on products where they can control most of the variables. For instance, entrepreneurs that aim to launch a startup in a new space will take more time to understand the market than founders who focus on areas they’re familiar with.
Creating products that help you overcome your own challenges is a good start. It is a great way to solve problems you are passionate about. Since longevity is a key ingredient of startup success, picking a battle you know you can compete in for many years is how you will succeed in business.
5. Long Performance Evaluation Cycles
There is always something that can be done to improve a product. The truth is, there is no such thing as a perfect product and long development cycles will only delay customer interaction and feedback.
It costs time and money to test new hypotheses. Therefore, the more insights you can gather before product development and the more involved customers are, the more likely you will build the right features. Building and releasing quickly is how you can minimize risk and expenses.
Avoiding these 5 mistakes will significantly increase the probability of your startup success. The truth is, applying those rules is easier said than done. To make sure you are moving in the right direction and making the right decisions, surround yourself with mentors and likeminded entrepreneurs.