At The Startup CFO, we are passionate about sharing good startup practices to help budding entrepreneurs on their journey to thrive and succeed. In this post, we are going to look at the top 10 mistakes when launching startups. While some of these mistakes seem obvious, they are often overlooked and require serious thought when building up a business that can truly succeed. Let’s take a look at some of the most common errors and how to avoid them.
1. Don’t let a name hold you back
Nowadays, startups need to be able to pivot and change direction relatively quickly. We all know how volatile markets are in 2022 and how companies often take radical decisions in order to both stay relevant and sometimes, quite literally survive. This often means exploring new routes, diversifying and opening up to new customer bases. Entrepreneurs are often surprised to learn that brands such as PayPal, Instagram and Twitter started with hugely different names (Confinity, Burbn and Odeo respectively). I think we can all agree that they just don’t have the same ring to them.
2. Take off the rose-tinted glasses
Entrepreneurs are passionate people, and we wouldn’t have it any other way. Enthusiasm, drive and a love for getting up in the morning to run a business you truly believe in is paramount to setting your startup apart from the crowd. However, a grounded and pragmatic attitude is key. It’s important to bear in mind that customers are king, which means that no matter how much you love your idea, users, and ultimately your target markets, you must adapt to your customers and deliver a value-add experience for them. The ability to take a step back and evaluate whether your idea will work and whether other people will be prepared to pay for it -and how much they’ll pay- is key.
3. Going too niche can be dangerous
Every new business needs a USP to set the brand apart and add value. While we often talk about the importance of brands “niching down” in the startup world, sometimes it helps to cast the net a little wider and search out a bigger target audience. Depending on the nature of your startup, it would be wise to explore the meaning of your product for different demographics and settings, rather than simply focusing on one.
4. Does the idea have a real USP?
While we don’t recommend “niching down” too much, a clear USP and providing a solution to a need or problem is absolutely invaluable. In an age of disloyal customers who can simply switch from one provider, app or product to another by tapping the screen of their smartphone, nothing can be taken for granted. Customers often visit 15 or more virtual POS (Points of Sale) when making a purchasing decision. This is evident in the popularity of rideshare and transport apps, where users often have 3 or 4 apps open on their smartphone and make a split-second purchase decision based on a multitude of offers.
5. Acumen over passion: Are we the right team for the job?
This point differs slightly from product USP but is equally as important. In the early stages of launching your startup, who you are and your identity as a team of experts is highly attractive to potential customers and investors. When launching a startup, you need to analyse whether you have the acumen to take the idea to the next level. Passion is essential but you won’t scale without expertise.
6. Ignore technology at your peril
Technology is no longer optional. That might go without saying for many tech and SaaS environments, but some entrepreneurs forget the importance of sound technological acumen, systems that run day-to-day activities and having a person on the team who understands the company’s technology to perfection. Consumers have become increasingly tech savvy and arguably more so during COVID-19; having systems that work immaculately is a bare minimum rather than an added bonus.
7. It’s not always about reinventing the wheel
This point is short but sweet. Sometimes the best ideas provide a new solution to an existing service, product type or problem. While revolutionary inventions do work out from time to time, providing a sound response to a market change, need or dissatisfaction can often prove a more secure route.
Never underestimate the power of networking when launching your startup. Not only does this essential activity help at the investment stage, but it also gains you clients and works wonders for word-of-mouth advertising. Sea inteligente sobre el tipo de información que comparte sin mantener sus tarjetas demasiado cerca de su pecho. Recuerde que hablar con los competidores está perfectamente bien, siempre que sepa cómo usar estas interacciones a su favor.
9. Not making sound funding decisions
As we explored in our last blog post (check it out here), a sound funding strategy is a prerequisite to launching a startup. Not approaching and networking with investors or experts who can point you in the right direction or introduce you to the people you need to pitch to or asking for too little or too much money and finding yourself in excessive debt can certainly influence upon this point, as can seeking investment from a channel or source that isn’t adequate for your business.
10. Neglecting reports
Your reports provide a constant guide to how the business is working and running and how well you are achieving your goals. Some entrepreneurs find numbers and data sheets a turn off, but we can’t emphasise enough how important it is to have a tip-top reporting system in place from Day 1. These figures are not just for your investors. They allow you to make the best decisions or change course if need be. At The Startup CFO, we specialise in providing an expert external CFO service that guides entrepreneurs through every stage of their finances, while also helping them approach investors and seek funding. Get in touch to find out more.