New businesses fail all the time, mostly because of common startup mistakes. In fact, some sources say that most startups launched will fail within the first five years. According to one Forbes article, as many as 90% of new startups will fail. Imagine that.
Only a handful of startups succeed because entrepreneurs are doing it wrong. Either they’re too optimistic or there is a measure of incompetence along the way. But the bottom line is this—most the failure of most new ventures can be linked back to five common startup mistakes.
If you are a startup and you are committed to succeeding, then you need to spot the five common startup mistakes and learn how to avoid them. Here they are.
- You did not validate your business idea: Working on your feasibility study should be the number one thing you need to do as a business person launching a new startup. Validating your business idea and your business model is a key element of a well-rounded feasibility study. It’s easy to get carried away with your business idea. And the passion you have for your idea could cloud your judgment. Validating your idea can be as simple as growing your mailing list and then sending a survey to your target audience. Other times, it’s more complicated but nonetheless, still critically important. For investors, a validated business idea and business model are essential to driving investment. Don’t make this all-too-common startup mistake and be certain to conduct a strong feasibility study that validates your business idea and business model.
- Overestimating/underestimating capabilities: A very wise man once said: “know thyself.” If you want your startup to be successful, as an entrepreneur, you need to know your strengths and your weaknesses. Know your core competencies and stick with them. Study other entrepreneurs so that you don’t repeat their mistakes. Accept criticism. Don’t make the common startup mistake of over-reliance and find help to cover areas where you are not strong or if you are feeling overwhelmed.
- Your plan and timeframes are all over the place: You know the portmanteau, “Guestimating”? It’s a word that means you are guessing and estimating. It’s not scientific or precise. As an entrepreneur, your plan and timeline should not be guestimates. They should be as precise as possible. Get your best people on projecting when you’ll get to breakeven or reap your profits. Always be precise by working on your projections with scientific accuracy. It means you need to use the scientific method. Observation and experimentation is a must. Use techniques like A/B testing or split testing to optimize your results. This way you’re not just speculating, you will actually know what works.
- You are not ready to face impediments along the way: To launch a sustainably successful startup, get ready to spend sleepless nights simulating obstacles and coming up with solutions to each one of them. The important thing is to know where and when failure could happen. In basketball, there is a point of attack in offense. In business, there is a point of failure. It can be lousy employees, errors in your systems, or cyclical ups-and-downs of your market. Failing to prepare for major business obstacles or catastrophes is another common startup mistake that will render you reactive rather than proactive.
- You are not familiar with your target market: Successful startups don’t try to be everything to everyone. In fact, they do just the opposite and narrow their target market with laser-like precision. Narrow down your audience as much as you can. Do this by noting what kind of people or businesses you want to serve. It’s easy if you are selling fire trucks. Your audience is the fire department. But usually, markets and customers are much more complicated than that. In some cases, startups are targeting brand new markets. In any case, you need to identify your target market with a high degree of precision and then spend time learning everything you can about the customers within that market. What are their likes and dislikes? What factors influence their buying decisions? These are just a few of the questions you need to be able to address about your target market.
There you have five of the most common startup mistakes. Learn these and study them carefully so you fully understand how they can be avoided. It’s understandable that new entrepreneurs are excited about launching their new ventures and are anxious to dive in and get started. But the smart founders know that planning and preparation are critical to success. If you want to launch a successful new business venture, be sure you don’t make these five common startup mistakes.
Contact me today if you want to talk about how I can help you launch a strong, successful startup. I’ve helped entrepreneurs around the globe launch and grow their new businesses.