5 most vital mistakes the First-time Entrepreneurs commit !!

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Startup success rate is claimed to be at less than 10% which is fairly low. For any business to run successfully the first priority is MONEY. If you have money than you have the leverage to make mistakes, errors, and experiment. However, this absolutely does not mean that you start running behind the money, on the contrary money should be your last priority, while being aware of how to spend it wisely.

For most of the first time Entrepreneurs, it is especially tough since there are so many things to do. Apart from thinking about the new features, procurement, and operations, there are still a zillion other things to care about. In the mist of which they miss out of properly calculating and planning their investments.

Indeed this article would be too short if I had to cover all the points so I am just mentioning the 5 points that are most vital. The below 5 points are all different aspects of the startup phase but are directly or indirectly related to some chunk of money being wasted. The first 3 points will relate to the pre-launch issues and the later to will emphasize on the post-launch aspects.

Conservative way of idea validation: (Failing to talk to the real customers):

Traditionally entrepreneur had to do a lot of research to validate the idea because people would be reluctant to share their experiences, also because, for some, there was no way to identify and target their customers.

Problem:

You will realize it within a few months of operation, whether the idea was improperly validated or not. You would have already invested heavy capital and significant time building the first model. Reworking on the same idea and being defeated once is not just a financial hit but an emotional and psychological hit as well.

Solution:

  • Don’t be shy, if you want to be Entrepreneur you will have to talk and sell your product every day from here on.
  • Use social media to find your target audience and organize a meeting.
  • Services like Google Map can help you locate specific shops with their contact details.
  • Websites like TypeForm and SurveyMonkey can help you create Survey Forms and reach millions of people in a moment.
  • Talking to customers to understand what problem they are facing and whether they will buy what you are selling.
  • For information: 7 step guide to validate your idea before developing it to reality!!

They dive right into the development of their website or mobile application:

This one is the most cliched and it is not even the fault of the founders. The real fault is of the development partners, they should inform you on the way things should be worked instead of agreeing to everything that the founder says. Most of the founders are not technical and there is only so much they can do while trying to get an in-depth knowledge of a new domain. In all honesty, the website (software) development is pretty much similar to developing any startup, all the phases are more or less the same. There is research, a demo, validation, rework and finally launch.

Problem:

It is tough to find a development team which specializes in startups. The traditional development companies will not help you in validating your idea and will just build what you ask them to since they are used to working with big companies who already have all the other things sorted.

Solution:

I have an easy to follow step-by-step article on How to prepare yourself before reaching out to a development team. .

Else, try to find a development team which specializes in working with startups, then it is a jackpot. This will help you in 2 ways, firstly, they will take half of your burden away by guiding you from their experience of working with other startups. Secondly, their suggestions and inputs will really open a new perspective on the original idea.

Choosing a company based on their image rather than the person they interact with:

The most common way of deciding the tech partner is based on their social media image or its founder’s nature and insight and it is indeed a good way to filter out the right companies from the crowd. However, it is important to realize that no matter how good the founder or the social media image of the company is, what matters is the person who will be handling your project. If the person you are interacting with understands your requirement then you are in safe hands.

Problem:

Social media can be deceptive, the company image and its reality can differ significantly. A Company is made by its employees and no two individuals are equal. In a typical IT company, a project is generally assigned to a Project Manager and it is this person which will have a major influence on your project. At times, the entrepreneurs get stuck with a person who is not able to relate to the project or provide valuable inputs.

Solution:

Pretty simple, it is very similar to marrying someone. Of course, you see their background but the highest weight is given to the actual communication and the synergy while getting to know each other. The person you are interacting with matters the most since he will be handling your project, so forget what you read, erase what the founder said and completely concentrate on what the manager is saying. If you don’t like him ask for a replacement or find a new company. Don’t risk it unless you are confident.

More Details: 5 Non-technical ways to hire a technical company

Improper Operational cost calculation:

Well, startups are different, when people say think 3 years ahead they are not talking about the dreams alone, they literally mean it. You need to be prepared for the next three years in advance. Then again the “Change” is the only constant and your idea will evolve with time but setting the right goals and vision are more important than you think.

Problem:

Most of the first time entrepreneurs are not experienced enough to micro-calculate and take into account all the possible costs that they would inculcate over a period of time. For example, just something basic, one of my client forgot to add his own salary while calculating to the price of his product. Going 3 years without a salary. Another one added his salary but didn’t count his company as a separate entity, due to which the company account and his person were the same.

Solution:

Plan for small independent phases, the delta of failure would be much smaller for a 6 month than for 3 years. There is no defined process to build this maturity it is something you build up with experience. What you can do it in your day to day life keep trying to predict the future and improve your strategy with every failure.

Making money the priority:

And finally MONEY, how can we end any topic about the life without including the ultimate devil. Every movie has a villain and ours is MONEY. Well jokes apart, Money is pretty important for any startup or rather any business to survive and thrive. However, there is a huge difference between working for money and earning money.

Problem:

Startups are always in a money-crunched situation and at each step, you, as a founder, will stand on a crossroad and your decision will be the guiding light for your startup’s journey. It can be pretty tempting to choose the direction which glitters but it may not always be the best decision.

Solution:

Well, there are multiple ways to put it. Depending on the person the strategy might change, nonetheless no matter whom you take the advice from it will always mean one thing. Never lose the sight of the “WHY”, why you are starting what you are starting? Till the time you remember the reason, you will always be able to find your way back. Let money be the by-product of what you do not the reason itself.

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14 thoughts on “5 most vital mistakes the First-time Entrepreneurs commit !!

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