A passionate entrepreneur who has successfully set up and exited a number of businesses in the digital and innovation space over the past twenty years; most recently launched a suite of products for startups and early stage companies. These revolve around ideas, people and funding. He is also in the process of co-authoring a book about the Ideas Economy.
Common Mistakes Start-ups Make
Starting a business is a journey into the unknown. Having mentored numerous entrepreneurs over the years, and seen the rise in standards of business plans and the levels of support for starting businesses, it shocks me how many risks entrepreneurs are willing to take.
Entrepreneurs are risk-takers by nature. Starting a new venture is highly risky – it’s a journey into a complex market place – but why would you take this step with your eyes shut? Most people take a tried-and-tested route to start-up failure:
- They have an idea that they think will work and from which they can make money
- Also they write a business plan to show how the business will work and grow
- After, they look for investment funding to build their product and take it to market
- When they launch their start-up but not enough people buy their offering, so they decide to shut their business
Taking a more scientific approach to launching their start-up will lead to less failure rates.
Most start-ups fail, says the data. It’s just a case of how long the entrepreneur hangs in there before failure occurs. This doesn’t have to be the case. If an entrepreneur takes a different, more scientific approach they can mitigate most of the risks by making sure their start-up idea is one people want to buy before even trying to launch. Why launch something nobody wants to buy and become another start-up failure stat. It’s better to stop before you launch and start spending serious money on a flop. If you can’t show that people want your product or service, and are willing to pay for it, then you are launching blind like most of the other failures.
There are further mistakes that entrepreneurs make at the pre-launch stage. The most terminal is ‘not looking to validate whether or not there is a product-market fit’.
- Spending too much time looking for funding
- Building the product or service before marketing the concept
- Forming a company and formalising structure too early
- Deciding on business partners too early
- Being too secretive about the idea, to protect intellectual property (IP)
- Thinking having a great idea is enough proof for everyone to want to buy the product or service
- Not looking for a niche
- Not looking at what the competition does
- Spreading equity too thinly
If you ask most start-up entrepreneurs what they think of as their biggest problem, it’s almost certainly lack of funding, not lack of market need. So it’s not surprising they spend most of their time looking for investment that they are very unlikely to get. Savvy investors look for signs of success, not good ideas.
The start-up entrepreneur has many pitfalls to avoid. It’s all too easy to fall into the traps listed above. Taking a more scientific approach to launching their start-up will lead to less failure rates.
I have spent 30 years launching start-ups and have made all of these mistakes in the past. I now work with a group of experienced entrepreneurs, mentors and philanthropists at 12Ronnies.com to help founders launch their start-up dreams.