There are different decisions that Start-Ups are taking everyday, some of them are right, some of them completely wrong. While taking the right decisions is extremely positive, failing may be the key of success.
Every Start-Up fails in different activities, decisions, strategies, concepts, business models, finance management, among others. Nevertheless, the most important is not to discover why they failed, but rather to identify what really happened, learn from it, evolve and grow.
Failure is always going to be present, if you are smart enough to identify it promptly, to learn from it and to do not let the same things happen again, your chances of succeeding are really high.
From conversations I’ve had with many Start-Ups within different countries, different cultures, different businesses models, here you will find the most common mistakes I’ve heard over and over again.
Waiting too long to go to the market
Creating the perfect product or service, spending tons of hours based on assumptions without obtaining customer’s feedback. In the the end, investing too much time on guessing what customers want/need and afterwards realizing that your assumptions may have been wrong, or that you invested too much time in activity A, but the one that really matter to your customers is activity B.
Nowadays you should be focused on creating a minimum valuable product following lean methods, sell it to customers as soon as possible, if they buy it, ask them why did it, and what would they add to it. If they didn’t ask them what you should do/improve/add in order for them to buy your product. What is that, which they would like to have? Instead of making assumptions, go outside of your office, confront yourself with potential customers and get real feedback. This is what will make your product valuable!
Hiring the wrong people
More than evaluating CVs, Start-Ups should strongly consider if the applicants are sharing the same passion about the product or service you are offering, even MORE if you are looking for management positions .
First of all you have to properly identify which are the persons that you really need, identify exactly why you need them, set concrete goals and properly analyze what they should bring. It is not only about how qualified people are, if they do not completely identify and and fall in love with your Start-Up you won’t be able to get their real potential.
Willingness of being global
It is excellent to dream to bring products or services focusing on the whole world, although this has to come step by step. Many Start-Ups have faced the challenges of starting in different markets at the same time and dying while trying. In order to avoid this, you should select one or two relevant cities to start, if you are there even better! And do not move further until these ones are working properly and your business concept is already validated and generating traction, once you succeed in one city it is easier to go to the next one, once you succeed in one country it is easier to succeed in the next one. A lesson from the economy: “If you want to be global, you have to be local first”.
Hiring a sales manager/executive too soon
If you are a Start-Up then sales belongs to the owners! Hiring a sales manager or sales executive too soon is really dangerous as no one is going to be able to sell your Start-Up as you do! Even if you can find really passionate sales persons willing to promote your products or services, do they really understand what is it all about?
Products and services evolve and should evolve from every single sales and project meeting, in which you use these opportunities to get feedback on what your customers really want to have, what can make your product more valuable to them and what is needed to make your customers love your product or service.
Waiting too long to fire employees
Being results oriented may be difficult, especially if there are many things that “are going to come” “next week or next month for sure we’ll have it”. But waiting and waiting for results may kill your business! The first experiences firing employees are dramatic, but sometimes it is better to live this drama as soon as possible than later regret by looking back on how you could have use this money to really create business, to really get customers satisfaction or to just have a nice holiday.
Many Start-Ups experience cashflow issues, even if you are really good at selling your products and services, you have to be sure on how the payment conditions are done, and be sure that at the end of the month, you are able to cover your fix costs at a 100%, and next month, and next month. The moment you forget about this, you can get into really uncomfortable situations and even see your Start-Up die.
Trying to do everything by themselves
We need a website, I will do it. We need a new brand, I will do it. We need business cards, I will do it. We need to make a balance sheet, I will do it… If you are leading a Start-Up then you should get focused on generating business, on getting customer’s feedback and not about operational things. If you invest 80% of your time in activities that are not customer oriented, you will generate just 20% of the customers you may be willing to have. Why not try it in the opposite way? Focus on your business 80% of your time and use the remaining 20% on supervising, directing and delegating activities to your team or external partners.
Wrong or incomplete identification of customers (target group)
Many Startups set the focus on the product or the service but not on the customer. It is vital to understand properly who your target groups are, who are the customers that are willing to pay for your product or service and to define a persona for each target group that may be crucial. In order to do it, you should get to know everything about your customers: who they are, what they do when they wake up, how their day looks like, what they find interesting, what their passions are and in which networks they are present. Put all of these characteristics together, give a name and search for a suitable picture for each persona of your target group and you will get closer and closer to your real potential customers. Without properly understanding who your target groups are, press and marketing investments do not make any sense, so give a strong focus to this.
So these were the most frequent mistakes I’ve heard from many Start-Ups. As mentioned before, I am really looking forward to getting your impressions, what you agree with, what you disagree with and which other mistakes do you believe Start-Ups incur.