That question is impossible to answer. Put simply, if we knew what mistakes caused startups to fail, we could easily avoid them. It’s like asking what makes startups succeed. If there was a recipe for definite success, we’d all follow it and build great companies, right?
Starting a business is easy and anyone can do it. However, building a company is exceptionally difficult. Although no one can guarantee success, here are few mistakes you should avoid early on.
Never Walk Alone
Starting up a business is filled with stress and challenges. No one is an expert at everything and certainly, no one knows everything. So having someone (co-founder or adviser) to split the work load will help you be more productive and focused. The ideal co-founder is one with a different skill set than you so your combined expertise will cover multiple areas. Just take a look at Google or Apple and their founders.
Silicon Valley, the HBO’s hit TV show, has shown us the need to diversify an employee base. For example, to build great software, you need to do more than write good code. The code is the cornerstone of the software, but having a team of just developers will likely lead to some headaches. You want your developers writing code, and not being bogged down by also overseeing finance, strategy, project management, etc. You need your developers focused on writing code, which means your need someone else to handle the other aspects of the business.
Startups Raising Too Much Money
Not having enough money can kill your business for obvious reasons. But is there such thing as having too much money? The answer is yes, and here’s why.
The goal is not to raise as much money as you can. Why? Because having a lot of money is great unless you don’t know what to do with all of it. The goal should be to raise just enough money that will help you achieve your objectives for the existing period. The problem is not so much the money itself. The problem is what comes with it. The more money that you raise, the more time it takes. Also, the more money you take from investors, the harder it is to change the direction of the business. Investors are very cautious with the money they invest and most likely they won’t let you change direction after raising a significant amount of money.
You Can’t Avoid Competition
Often times startups go so narrow with their idea and market niche in the hope that they can avoid competition. This usually results in choosing small and obscure market niches, where problems are not easily seen by market participants and where solutions are less valued. If you come up with something great, more often that not, you will have competition. Just accept that, and don’t be afraid of big ideas.