First-time founders are often believers who want to create a better future through their ideas and businesses. However, many first-time founders forget that having a great business idea is not always enough. Because of this, they end up making a lot of mistakes, with many of the mistakes they make being the same ones that other founders have made in the past. Making mistakes and learning from them is part of running a successful start-up. In this article, we are going to look at common mistakes first-time founders should avoid as they get their businesses off the ground.
Infographic created by Clover Network, a POS software company
Ignoring or Not Understanding Market Risk
Market risk cannot be ignored and doing so or downplaying it is one of the most common reasons why many start-ups fail. Many founders seek to perfect their technologies and business ideas but forget to put enough effort into ensuring their start-ups provide enough value to those the business is targeting.
Instead of burning through a lot of money trying to perfect a product or technology, it would be better for a first-time founder to spend some time talking to potential customers. In addition to helping the founders validate their ideas or technologies, doing so will help them understand their customers and their needs better.
Incorrectly Setting Up the Founding Team
The founding team remains one of the most important assets a start-up can have. The founding team should include employees with different skills from different backgrounds and who possess different character traits. More importantly, every member of the founding team should have something unique to contribute and their contribution should go towards ensuring the survival of the start-up at its earliest stages.
For example, many founding teams are made up of marketing or technology experts which makes them too homogenous and inflexible. Choosing and including professionally complementary team members is critical for the survival of a business at its earliest stages.
Not Managing Their Start-up’s Growth
Growth is important and this is why a common piece of advice offered to founders is to go first and go fast. While getting to the market first, hiring the right people quickly, and spending the money required to get off the ground quickly is the right way to go in many settings, it is not always the best way.
Growing too fast is one of the reasons why a lot of start-ups fail. It is more prudent to go slow, learn the market and build a team as and when it feels right. Once everything starts falling into place, a founder can then put more effort into growth. Taking things one step at a time ensures a founder builds their start-up on a solid foundation which is a lot less likely to crumble.
Not Gaining Sufficient Knowledge First
Although not everyone needs an advanced business degree to run a successful start-up, not having the right business skills is a major disadvantage. No matter how good the business or start-up idea is, the chances of being successful are quite slim if a founder cannot run the day-to-day tasks of their business.
Even where a founder has a business degree, they may not have the advanced understanding of business that is required to run a modern business or start-up. Founders who want to gain this advanced knowledge can enrol in one of the available doctor of business administration online programmes at Aston University that teach founders and business leaders the skills required to not only run successful businesses and start-ups, but also how to solve the complex business problems that come with doing so.
Doing Too Much Themselves
A lot of founders make the mistake of wanting to do everything by themselves. It is understandable for founders to be concerned about their start-ups and therefore want to make sure everything is going right according to them. However, doing this often leads to stress and overexertion which can be detrimental to the start-up.
Instead of doing everything themselves, founders should outsource activities they cannot or should not handle by themselves. This also ties in with hiring the right people at the beginning so they can support the founder in areas where they do not have to handle things by themselves.
Taking the Wrong Advice
It is understandable for a founder to try to find advice before they move on with their plans. The only problem is that the start-up space is full of advice that might not fit the founder’s circumstances. In some cases, the advice might be wrong. Before taking or implementing any advice, founders should consider who is offering the advice, if it is the right advice and then think about the consequences of taking that advice before they do.
Ignoring Constructive Feedback
In many cases, constructive feedback is confused with criticism. Because of this, many founders are wary of taking constructive criticism, especially if they do not trust the person offering it. However, ignoring constructive criticism from a venture capitalist or potential customer could be detrimental to a start-up. These outside parties may have insight that a founder may not be aware of or that they may have been ignoring exploring.
Even where an investor has passed on investing in a start-up, it is always a good idea to find out why they did so. They may be able to offer insight and constructive feedback that could either turn them into an investor in the future, help the business attract new investors, or start making money.
In cases where there is more than one founder, conflicts are likely to occur. The conflict can be about strategies, finance or the steps to take once the business is on a solid footing. If these conflicts are not resolved, things can escalate and this puts pressure on the founders as well as their start-up.
When this goes on for long enough, founders may start looking for a way to get out of this environment and that may eventually lead to the death of the start-up.
While no one has a secret formula to avoiding the mistakes many founders make, knowing what these mistakes are is an important step in avoiding them.