There are many startup mistakes and pitfalls you can make when beginning a venture. And some of the biggest companies have failed spectacularly. However, you can learn from their mistakes to all but ensure your new company doesn’t become a footnote in business history.
Not Getting Official Documents in Order
Any new startup needs to be officially registered and licensed, no matter your country of operation. Not doing this will result in fines and penalties that will cause your business to stall before you have even had the chance to make a mark on the world. Taxes are a perfect example. This is why you need to make a Federal tax ID number application for the United States. Or register and apply for a UTR application through HMRC in the United Kingdom.
Startup Mistakes Include Misallocation of Funds
Many innovators make one of the biggest common errors by not putting money into talent, employee benefits, and the tools they need to run their businesses. And that’s spending money on things that don’t matter in the big picture. These things include expensive offices, silly rewards for employees, and other ways to brand the company, like swag and gear. You must use the limited money you have to build a strong base for your business when starting out.
Trying to Do Everything Yourself
Sure, many successful businesses were started by just one person. In the tech world, many. Examples include Amazon, eBay, and ToDoist. But they are more of an exception than a rule. When you are the only person involved, it is hard to start a business. Most of the time, it’s scary because there are so many things to think about when running a business. But when you’re tired from working too much and burn out, you can also do more damage to your business.
Extra: Don’t Become Like These
There are hundreds of failed startups in the modern era of business. Most are related to tech or use new tech in some way. And some of them engaged in criminal actions to try to make their business more profitable than it would be by being honest. Some examples are:
- Movie Pass: assumed theaters would embrace its vision of unlimited screenings.
- Theranos: conned investors into believing it had a world-changing device.
- Quibi: didn’t listen to advice that people wouldn’t pay for short-form movies.
- Munchery: expanded its meal delivery service before sales were solid enough.
- Hipmunk: travel comparison site that failed to keep up with evolving tech.
These companies made several mistakes. One of the biggest was Theranos when Elizabeth Holmes blatantly lied to investors about the validity of a new blood test machine which once valued the company at $9 billion. Homes has subsequently been handed an 11-year sentence.
Rushing the Hiring Stages
About 23% of startups fail because the team doesn’t have enough expertise, a shared vision, or the right skills. So, the most important thing is to hire the right people at the right time. If you start to recruit staff too soon, you could run out of money for your business. With the help of subcontractors, freelancers, and service providers, it is much easier to run a new business these days. But you need a strong base team to help with business execution on a daily basis.
No Clear Audience is a Big Startup Mistake
Not learning about your customers is a common mistake made by new businesses. For a construction person, it can be easier to get on with the job than to talk to customers. But you can’t know if you’re on the correct path unless you get feedback all the time. So, you should know that concentrating on your industry and audience is unquestionably the most crucial aspect. Modern data analytics apps are a great help and are easier to use these days.
Comparing Yourself to Others
Getting your startup off the ground and keeping it going is a high-risk process. You don’t need to make it worse by comparing yourself to other firms that aren’t like yours. For example, the statistics for the success of an app made for business-to-business operations will be distinct from those of an app made for customers. Of course, a big part of the business is to study your competitors. But it doesn’t help to look at the wrong companies or ones that don’t matter.
Summary
Startup mistakes are common. Yet you can rectify them most of the time. That being said, there are some that can have both short and long-term consequences for your business. Some of these include not filing tax returns, doing everything yourself, and comparing your business.
