Starting your own business isn’t easy itself, not to mention that only half of the small and middle businesses survive the first 5 years and just ⅓ get through their first decade. The reasons for closure might be different:
Starting your own business isn’t easy itself, not to mention that only half of the small and middle businesses survive the first 5 years and just ⅓ get through their first decade. The reasons for closure might be different: lack of investments, bad market conditions, force majeure, etc. But today we’ll focus on the most typical mistakes some startup founders make, like:
Let’s have a closer look at some of them, as well as at the possible ways to avoid them.
Each entrepreneur is 100% sure their product is amazing and people all over the world will love it immediately. Even though it’s an exaggeration, it’s true to some extent, especially for startups. The study shows that around 42% of startups fail because no one actually wants their product. To succeed in launching your solution, you should solve at least one of the customers’ problems.
The best way to find out if people are interested in your product is to conduct market research before starting to develop a product. This will help you create a good app or website and shape a solid go-to-market strategy based on real insights from your target audience. And yes, asking your friends or family about your product is not enough.
A good idea would be to study the activities of your competitors (if any) and analyze whom they are targeting. If you have a larger budget, it will be great to order research from a company that specializes in providing such services. It will help you get a comprehensive view of your audience and understand if there is a demand for your product.
Another misstep a startupper can take is to start forming an in-house software development team after the first round of investments. These people can be the best specialists, but they will rarely make a good team in the blink of an eye, while every second can be crucial for your business. It can also take too long for them to get acquainted with your product and its specifics.
The way out is to find an outsourcing company which offers a variety of IT services for startups. An experienced team of technical experts and a dedicated manager will allow you to save your money and time on product development. As a result, you’ll be able to speed up the time to market.
If you still decide to have your own team of tech specialists, select them thoroughly in order to avoid a possible mismatch with each other. Hiring the wrong people is even worse than having an expensive expert on board. Technical skills can be improved over time, while interpersonal not.
Ideally, all your employees should share the same values. To understand why company culture is so important, develop your own, and test if the hired people fit it, we recommend checking a book “Delivering Happiness” by Tony Hsieh.
An MVP stands for a minimum viable product. To put it simply, it’s the first version of your application or website, which contains enough of the basic features for the customers to use it and evaluate it. Yet, many startups forget to develop a “light” version of their product, believing that they can go to market only having a fully-packed software.
The problem with focusing on a final product instead of developing an MVP is that you can lose time and spend too much money on polishing it. Someone else can easily launch a similar solution while you’ll still be making your app or website overly good.
One of the brightest examples of a successful transformation from an MVP to a full-featured product is Facebook. They started as TheFacebook for connecting college mates in Harvard, then expanding to most universities in the US and Canada, and finally becoming available for anyone all over the world.
Here’s a short checklist for you to build a good MVP (we assume you’ve already done market research, that’s why we skip this initial stage):
Stuffing it with lots of features is never a good idea. Many of them can turn out to be unnecessary after testing. As a result, you will get a highly sophisticated software and it will hardly be an easy-to-use one.
The golden rule of any interface is its simplicity. Every single element on any screen should be intuitive, be it a menu, a button, a pop-up, or anything else. Users should understand what will happen after each interaction with your product from a first glance.
If you want to keep the usability of your app or website at a high level, it’s better to plan and analyze each option carefully, in order not to waste your resources on something that will never be used. To check if the feature should be implemented, you can use the 5 Whys technique, first described by Eric Ries in his book “Lean Startup:”
For instance, if you decide to add the possibility to sign in via social media, the process can look as follows:
As you can see, sometimes even 3 or 4 Whys are enough to discover the business value of implementing a new feature.
To go a simpler way, you can address an external team that provides tech support for startups and they will do all the estimation for you.
Another pitfall many startups face when raising enough money—scaling too quickly, hiring more and more people, opening new affiliates in different locations, and so on.
It doesn’t mean you shouldn’t expand. It means you should approach it wisely. According to a report, 74% of quite promising startups fail because they start scaling too early and do it too fast. It leads to a quickly drained budget without achieving any business goals. And the next rounds of funding are really tough, as no one wants to invest in a product which just consumes more money and doesn’t bring revenue.
Here are a few steps that can be helpful:
These are the basic reasons why lots of startups cannot make it longer than a couple of years. But there is one more mistake you can make when starting your business: inability to delegate. You can be sure that no one ever will develop and market your product better than you. Such thoughts are nothing more than the beginning of the end. Trying to do everything on your own will lead to the death of your startup unless you are Gaius Julius Caesar or have 4 hands as Shiva does.
There are lots of professionals who can give you an expert piece of advice and support the tech part of your solution while you can focus on business development. If you are looking for such an outsourcing partner, we will be happy to supply you with a dedicated team that will take care of your product and help you to get revenue faster than you can expect.
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