When it comes to the world of startups, aspiring entrepreneurs are inheritors of the valuable knowledge and wisdom that have been painstakingly acquired by entrepreneurs who have gone before them.
Learning from others’ mistakes and knowing the red flags to watch would get you off on the right foot. Here's a list of the top 5 early stage startup mistakes and how to avoid them!
Red Flag #1 Not Validating Your Idea
Locking yourself in a room and building a product without talking to a single customer.
What to do instead: Validate your idea
1. Use Pre-sales and waiting lists
Run test campaigns on Linkedin, pretend this product/service exists and see if there are people willing to join the waiting list while waiting for the actual product to be rolled out. This would give you a good idea as to whether your product is attractive not only to you, but to your intended audience as well.
2. Try selling at least 10 items before diving into an Ecommerce business
For those looking to start an Ecommerce business, try selling at least 10 items to test and see if there is actual demand for the products before committing to a massive order.
Red Flag #2 Refusing to Pivot
Not pivoting or adjusting when your original idea is not working or did not receive the validation you expected.
While getting sentimental about business ideas is perfectly understandable, not pivoting to observation data and making adjustments accordingly can be detrimental to your business.
What to do instead: Embrace change
Focus on what works and narrow down your focus. Remember, less is more. Approach your target audience for feedback on your product. Find out why your product isn’t working for them and the possible alterations that could be made to get them interested.
Remember, startups tend to pivot often and that’s often what allowed them to succeed..
Red Flag #3 Build to Sell
Your business model is Series A, Series B, and a lucrative Exit.
Hint: You don’t have a business model.
What to do instead: Build as if it’ll last forever
1. Ensure that you balance growth and profitability.
While there are various stages of growth, and it’s not uncommon for companies to lose money during the first few months or years, it is imperative that you have a business that’s sustainably profitable in the long run.
When you focus on building a business that offers products/services the market really wants, investors will swarm in to have a slice of the pie.
Red Flag #4 Clueless about Numbers
Know your numbers!
Founders who don’t have a grasp of the numbers of the business often fail to get investors onboard. In the rare cases where their ideas get funded, not knowing what to measure on a day to day basis is the reason that led to countless startups to their early demise.
What to do instead: Measure what matters
What’s your fixed cost
What’s your marginal cost
What’s your margin
What’s your Conversion Rate
What’s your Cost per Acquisition
How many sales/contracts you need to break even
What to do instead: Study your industry and audience
Who are your top competitors
How are your competitors pricing their products
What are the competitive USPs
Why do people buy the product or service
Where and how they buy
How long do they take to decide
Red Flag #5 Growth Hacking is Your Primary Marketing Strategy
Marketing is a must and it does not run on autopilot. Your amazing product does not sell itself unless the right audience hears about it. Repeatedly.
Startups that depend on growth hacking tactics often struggle to reach their intended target audience and foster relationships that would lead them to convert, and convert again.
What to do instead: Invest in proper marketing
As the founder, be hands-on
Become obsessed with marketing your business
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