10 Common Mistakes Made by Startups

Growing a startup is a huge challenge. There are so many moving parts, and each one of them can play a key role in whether a startup succeeds or fails.

There are, however, some common mistakes made by startups that bolster their chances of stumbling into the digital abyss. Here are 10 of them:

1. Don’t solve a problem or meet a need: This is a tough one because it is so easy to launch a startup. It means many too startups are created without much raison d’etre. It is hard to develop a business when it has no mandate, mission or purpose.

2. No business model: I’ll likely get pushback on this one but having no idea about how your startup is going to make money is dangerous. In some way, a startup needs a plan on how money will come in the door, otherwise you’re working on a project, not a business.

3. Focus on features more than usability and design: Too many startups think when it comes to features, more is better so they keep adding new bells and whistles. Instead, startups should focus on giving users a user-friendly, intuitive experience that lets them get full value out of the product or service.

4. Hiring too many people: In many cases, a startup will begin to see revenue traction but becomes too excited or aggressive, which means there are more employees than the business can support or needs.

5. Hiring the wrong people: This is particularly important during the early days when every hire is crucial. Not every new employee has to be a rock-star but startups can’t afford to have a weak link. This often happens when hiring happens too fast, or they take the easy way out by hiring a friend or former colleague.

6. Blissfully ignorant of the competition: It’s not that you should obsess about rivals but it is important to know who they are, how they approach marketing and sales, and how their products are evolving and changing. This can be an informal process or a monthly/quarterly competitive review.

7. Under-financed: Within the Canadian startup landscape, under-funding is a chronic problem but startups that find themselves running on fumes have little chance to drive growth. For most startups, it means the hunt for financing is never-ending and, as important, when it does materialize, they should raise more than what’s needed.

8. Spend money on the wrong things: It is always surprising to see startups spend money on nice-to-have vs. have-to-have things. The leading culprits are office space, funky furniture, parties, out-of-town conferences, perks and bonuses.

9. No perspective: The reality about working for a startup is it’s an immersive, consuming experience. You’re so focused on the task at hand it can be easy to lose perspective on what’s going on within the marketplace. This is a dangerous situation because it can by easy to lose context or a sense of what needs to be done or changed.

10. Count on media and blog coverage to capture the spotlight: Truth be told, getting media and blogger coverage is the cherry on the top of the sundae. It’s a great way to demonstrate the business has traction but, at the end day, your time in the spotlight doesn’t last long. Enjoy the coverage but realize it’s a small, nice bump in the road.

What else would belong on this list?

More: TechCrunch has a post on the seven daily sales sins made by startups.

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  • Jeremy Campbell

    I would say that things take longer than expected, especially for startups with small funding and a small team. In my experience things take at least 2X as long and cost 2X as much as originally planned!

    Great article as usual Mark, thanks for sharing!

    • Mark Evans

      Excellent point. Far too often, startups expect instant success, and then get discouraged when it doesn’t happen. Patience may be a virtue but it doesn’t mean everyone has it! Thanks for the comment!

  • Stephen Duke

    Mark, I’d love to hear your thoughts around startup board composition. What is ideal when there are two-three founders and some early outside investors?

    • Mark Evans

      Stephen: I think an effective board features a variety of perspectives and skill sets. Ideally, this provides a way for the founders to receive valuable and frank insight into strategic and tactical decisions. I think it’s helpful to have people who have little or no vested interest in the startup’s success so they aren’t biased financially. Thanks for the question. Mark

  • Adriana Galue

    Great post Mark.
    I would add that oftentimes entrepreneurs get overfocused on the solution they provide, not on the problem they are trying to solve. This causes a problem as it is easy to miss the appropriate time to pivot. In emerging markets, the focus is placed on raising capital rather than on creating a solid simple solution that gains traction. As you appropriately point out, the focus must be placed on being profitable early on in the game.

    • Mark Evans

      You’re absolutely right. I describe it as being “too close to the fire” because you lose a sense of the bigger picture.

  • Daryl @ VoIP Systems Sarasota

    I will second #8 on the list. Not staying within budget will kill a startup in a hurry. If you want the “Nice-to-haves” set goals that allow you to purchase them when you get the revenue to cover them.

    • Mark Evans

      I’ve learned this lesson first-hand. To be honest, it was a big head scratcher to see beautiful, modern furniture arrive when we would have been happy to stuff from Ikea or Staples for a lot less money. That said, I think most startups are pretty frugal these days.

  • William Mougayar

    Great list Mark. Re#2, I’m with you. What often happens is the startup should have a precise idea about the revenue model, but there are conditions that must precede its successful realization. So, you end-up focusing on reaching these conditions first, and that unlocks the revenue possibilities.

    In another scenario, you end-up innovating and discovering a new revenue model that you didn’t anticipate before. But the pillar for all this is having users and activity on your product, because that’s the basis for any business model.

  • @stevesampson11

    The extraordinarily rich Barclay Brothers (UK/newspapers/property) have a simple saying:”Don’t work with arseholes”. Rude but true. Ruthlessly dump anyone who is not pulling their weight/sub-standard, no matter who. Get the platform right first – everything else follows if you deliver your fabulous idea with great UX/UI, all the funcionality that users expect as a matter of course. And keep that business plan tucked in your inside breast pocket for constant review. Those targets you set in concept, used to hire in your lean team, pick up investment, are the only true measure of where you are daily/weekly/monthly. No plan, no business. As the Chinese say:”Man who fail to take aim hit f*ck all”. Keep believing.

  • Abdallah Al-Hakim

    great list Mark. I would add to #10 that rather than focus on media coverage, startups should focus on turning some of their users into becoming their biggest advocates. This will only happen by providing excellent service but having users promote you to other users is so much more valuable than one post in technology blog or news site

    • Michael Hazell

      I guess that I am an advocate of Disqus, because I fill everything you said above.

      • Abdallah Al-Hakim

        and I am sure if the topic of online commenting system comes up somewhere on the social networks you would promote disqus!! Satisfied customers who talk about the product is probably the holy grail for any business – classic word of mouth tactics

        • Michael Hazell

          Of course! No other system compares.

  • Michael Hazell

    I have to agree with number 2. You have to have a plan on how to make money before you build a product and startup.

  • Evelyn So

    You sum this up so well! One thing I constantly scratch my head about is the business model, or lack of, for many startups. They get the traction, they get the PR, they get the spotlight…but I question how the founders pay their bills (especially if they are, like me, have a family). Spending money on the wrong thing is another super wise advice. I have the benefit of living it through other people’s money in the dotcom boom where I spent many happy years boasting about a hip designer office, free flow beer, and celebrities-worthy office parties (admittedly, being Canadians, we were relatively tame but still..). Usability was my background and while I agree it is key, I also think it is more about how usability and design FITS into the big picture i.e. the actual value as perceived and agreed by the end customers. Once again your post has pinpointed things that are sensible but overlooked by many, thank you.

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