Failure is an essential part of the startup sphere, and it’s not always bad. There are lessons to be found in failure that can propel you to success on a future project. That being said, failure is never positive when it’s the result of mistakes that should have been easily corrected beforehand.
Every new startup, aspiring businessman wishes to make it to the top. He spends so many sleepless nights trying to come up with just the right idea for a product that he feels will change the world.Working day in, day out, he strives to perfect the product. Finally, with flawless execution, he turns his dream into a reality and enjoys the fruits of his labor. But this is a love story that doesn’t happen to everyone. It’s just wishful thinking, one-way traffic and nothing else.
1. Starting a Business without Mission and Vision
The first thing business owners need to do is to set a mission and vision statement for their company. Without a vision and mission, your business can never succeed because your objectives are not clear. Vision statement highlights your long-term goals while the mission statement sums up the business philosophy and methodology along with the purpose of doing business.
Understanding the purpose of your business existence and long term goals are not only critical to achieve business success but also plays a vital role in business decision-making process. Without a well-defined mission and vision statements, you might end up making wrong business decisions, which might led to the undoing of your business.
2. Splitting things 50/50
If you are a pair of entrepreneurs who are founding a company based on an idea you generated together, the desire to split profit and decision-making equally can be a strong temptation. It’s also one of the biggest mistakes a developing startup can make.
Sure, it might seem like both founders are on the same page in the early stages of the startup, but when conflict arises – and as you develop your product and the business becomes more complex, it certainly will – not having a clear way to make decisions will leave your startup spinning its wheels when it should be racing forward.
Although it might be an uncomfortable conversation, determining which founder holds a majority stake in decision making early on – or if you should bring in a third voting party to break ties – will save you so much pain in the long term.
3. Burning through money too fast
When you’re an entrepreneur who has been living on ramen and working seven days a week on your idea with no compensation, there’s nothing more exciting than when you finally get some money from investors to take your idea to the next level.
It can be tempting to put this money to work as fast as you possibly can by upgrading your equipment, finding office space, or hiring people to make your life a little easier. After all, investors are telling you your idea is good, and you’ll be making money in no time, right?
When deciding how to use your money, make sure you are spending it on needs rather than desires. Hiring another programmer so you can put in fewer hours may seem tempting, but unless the person you want to hire is essential for your project, your money could be put to better use.
In any venture, unexpected things will happen. Challenges will arise, people will disappoint you, things will break, and even if your first round of funding wildly exceeded your expectations there is no guarantee you will be getting more of it.
Keep a close eye on your finances and make sure you have enough to guide your company through hard times – because they’re always right over the horizon.
4. Ignoring Competitors
Although, some businesses tend to divert all their energies to know what their competitors are doing but there are some businesses that completely ignores them. You should avoid both extremes and strike a perfect balance between the two in order to succeed.
Businesses that obsess over competitors end up ignoring their customers while businesses ignoring competitors are left far behind in the race. Do not take your eyes off your competitors because they can strike back any time with full force. Devise your strategy to counter their next move beforehand so that you can stay one-step ahead of the pack.
5. Lack of Innovation and Expansion
In today’s rapidly evolving business world, you need to keep innovating and come up with unique products to compete with your competitors. Steve Jobs, the greatest innovator of our time sums it up brilliantly when he said, “Innovation distinguishes between a leader and a follower.”If you fail to expand your business and innovate, you might have a hard time surviving in today’s highly competitive business world.
6. Ineffective Risk Management
Keeping an eye on current and future threats is critical for the survival of your business. Most businesses ignore these risks and eventually find themselves in hot waters due to these risks. If you keep ignoring risks, they will become more dangerous as the time progresses and sometimes even get out of control. Therefore, it is better to identify and mitigate business risks in the early stage and have and effective strategy ready to cope up with it.
7. Ignoring the paperwork
In the earliest stages of a startup, when you are working with a small group of people you know, it can be tempting to seal deals with a conversation and a handshake. Although this method of deal making will save you lots of money on lawyer fees, it also creates a ticking time bomb that could potentially go off.
People, while amazing, can also be incredibly frustrating. Memories are inconsistent, conversations convey varying meanings, and nothing is usually as straightforward as we want it to be. If you want to spare hurt feelings or, court battles later on, make sure to keep an eye on your paperwork.
Want to give a friend who is a programmer some equity in exchange for work? Get it in writing. Do you know a marketer who is willing to help you craft a proposal for a small fee? Get it in writing.