14 Ways to Avoid Shutting Down Your Start-Up
It’s easy to make mistakes or fail, but startups tend to fall into the same traps over and over. Thus, here we have gathered a list of errors first-time founders make while starting a new business. And if you avoid these traps, the chances of having a more successful startup are much higher. So let’s get to the list that covers all aspects of building a company – everything from product to company culture and more.
1. Not having a proper business plan
This should be the starting point of any startup founder, but it’s often overlooked. Generally, founders dive straight into their shiny ideas and forget about the importance of proper planning. Without good planning, a startup can meander along without much thrust. And when time gets short, you no longer have enough time to set things up properly. Thus, having a proper business plan will help you grow, and it will also add some real meaning to your work and a cause that people can rally around.
2. Going too fast
It’s agreed that everyone wants to grow but the growth is not always good. When you go “too fast or too furious” it can harm your organization or can slow your business later. In the US, around 44% of startups fail due to premature scaling, and even the evidence has backed up those numbers ever since. Thus, avoid going too fast. It has many dangerous side effects such as overvaluing sales, cash flow mistakes, losing control of finances, ineffective business operations, hiring the wrong team, not scaling customer services, and management mistakes.
3. Hiring the wrong team
No business wants to hire someone who is not suitable or is the wrong person for a job. Because not only does it affect things such as productivity, but it also reduces employee morale. Moreover, it can take away time from your management team and potentially affect your ability to deliver the level of customer service you pride yourself on. To avoid hiring the wrong teammate, have an excellent requirement strategy, perform a thorough selection process, get the interview process right, conduct a structured reference interview, offer marketing resources to job seekers, proactively target candidates, have effective onboarding, work in partnership with a recruiter, and learn the indications of a good fit.
4. Ignoring constructive feedback
Whenever you receive feedback, please don’t ignore it, whether it’s negative or positive. If it is positive, show some gratitude and when it’s negative, take it as an advantage and solve the issue. Being a founder, you should always watch out for feedback. Also, the two most important things you should consider are who is giving the feedback and what their relationship to your company is. Constructive feedback is a gold mine for any business. Still, if you ignore the negative, it can be a nightmare for your business down the road.
5. Ignoring market risk
Ignoring or downplaying market risk is the single biggest reason companies fail. Starting a business from scratch is not such an easy feat. Most founders put too much emphasis on perfecting their technology platforms- which is understandable but not enough for making sure those platforms will deliver real business value. It takes around six to eight months to talk with potential clients or customers to understand their needs and validate your idea.
6. Mental fatigue
Generally, founders feel enormous pressure, and that’s natural. Some work more than 60 hours a week and can’t get full-night sleep without waking up in a cold sweat. They’re often overworked, and lonely as well as stressed out. These things impact their productivity, creativity, and analytical capacity that they don’t sense until it’s too late. Thus, give yourself time, and avoid mental fatigue, so the inevitable disappointments don’t become crisis points.
7. Taking Bad advice
Just because you love doing something, that doesn’t mean that other people will also love that. So when taking advice, consider the source, and weigh your response proportionally. Because startup advice is plentiful, but most of it is wrong. It’s a truism that people with valuable insights are in high demand. At the same time, those who have plenty of time to dispense advice typically don’t have much value to impart. Connect with those people who can genuinely help you with their mentorship, strategy, innovation, and leadership.
8. Launching too late (or too early)
Some startups spend months or even years getting ready for launch and end up never releasing at all as uncertainty and competition spoil the show. Equally, some founders have a poor platform and launch early in a true lean startup style. However, in both of these scenarios, if your product is not great or minimum incredible, don’t launch it. Before launching it, ensure there’s a base level of features, design, and usability across all functions; otherwise, you might not get the desired outcome you’re hoping for.
9. Not doing enough market research
The danger of skipping or neglecting market research can result in inaction, indecision, fear of risk or not knowing the truth about your product or service. When there are too many options, it can lead IA business into paralysis. The first step in conducting market research is to decide what you need to find out. Proper and enough market research will reduce the risk of product & business failures. There is no guarantee that a new idea will be a commercial success. Thus, to position yourself to keep existing customers or gain new business, you’ll need the correct data to back you up.
10. Failing to ask for help
Sometimes founders can be stubborn. There is no harm in asking for help early on, rather than avoiding it. There are a few advisors out there who’re ready to help you, and not just to fill their own pockets. Sometimes accepting that you don’t have enough ideas about running your start-up will allow you to ask for help, when necessary, can be a huge benefit. Spend some time finding a good mentor whom you can trust and who has a genuine interest in the success of your venture.
11. Going it alone
Startups with only one founder have a significantly higher rate of failure. Being a solo founder, you will own the entirety of the founding stocks in the business. You can’t control your customer's expectations when they pay you or buy your product. Even you can’t force your employees to do things according to your crazy expectations. Thus, without partners, you can put together anything that you consider the best.
12. Taking too much responsibility
When you take too much responsibility, such as finance, management, human resources, marketing, operations, hiring, firing, sales, and PR, it’s a lot of things to do. One sign of a good founder is that they know how to delegate. Having the desire to be in control can lead to over-working, too much stress, and failure. The tasks can be divided equally between other founders and CEOs, or you can hire someone who specializes in your respective field of skills.
13. Avoiding responsibility
Having a highly-skilled team doesn’t mean you can go on vacation or hang out every day and avoid responsibility. If you’re a founder, you need to lead by example and show that you’re capable of getting your hands dirty and that nothing is below you. Be the culture- and ask people to call you out if you’re acting outside of it.
14. Targeting the wrong audience
A startup needs to define its market segment. Without a well-thought marketing strategy, your startup can end up messaging people who will never buy your product or service. So ensure that you do plenty of research, user testing, and market tests to define the target audience to avoid targeting the wrong audience.
None of the founders has a magic formula to getting success overnight. But if they can de-risk their company’s path forward by avoiding these above mention mistakes, the chances of achieving that world-changing vision increase materially.