When your job is to read and write about start-up creations from morning till night, you often see their founders commit many elementary mistakes.
As an observer and creator of budding start-ups, I gathered all the blunders in their place; I would try to avoid as an entrepreneur.
These are the most common mistakes made by startups and their founders in their infancy.
Want to appear in the press too early or just “for the principle.”
If you have initiated a start-up and are looking to be mentioned in the press, the first question you must ask yourself is: “Why?”
Why do you need to be in the press? Are you ready? What will you win with an article?
If you want to be in a news article to look cool with your friends or employees, then it is not a good idea. If you want to attract users, you should understand the buzz will only be temporary. Take the example of Turntable.fm, Airtime, or Brewster.
In some cases, the press can have a beneficial impact. This can appeal to investors and offer significant support if you are looking for financing. An article in the journal Ad Age could allow you to earn money through advertising.
To raise too much money prematurely
Starting a startup is a terrifying thing. Nobody wants to see their savings go up in smoke. However, when start-up financing is based on outside investors, the founders may tend to throw money out the window. It can also dilute the capital and make the eventual dissolution of the company more difficult.
If you start your business without outside investors, you can strive to improve the business model and move forward without the pressure of the board of directors or the look of your investors over your shoulder. Once autonomous, you will be able to negotiate better terms with your potential investors. Finally, if no one controls your business from the outside, you can stop the adventure at any time without fear of being fired by the people who have invested in your business.
Attempt to start a startup on your own
Taking care of a start-up is stressful, and you cannot excel in all areas. To avoid burnout, you will need a co-founder and advisors to delegate the workload and have confidants. You will be more productive if other people help you with your task, not to mention that you will have a bigger starting kitty.
A start-up is also very time-consuming: it is normal to have the impression of being chained to your office. However, it is important to interact with other people and participate in productive meetings to advance your business.
On the contrary, having too many co-founders
At first glance, starting a business with your three best friends may seem like a great idea. But it does mean that you start by owning only 25% of the company even before raising your first financing. Also, it is difficult and frustrating to run the business with four people pulling strings, especially if some do not provide their share of work. Most start-ups often move from several founders to one. Take the example of Facebook, Quora, Path, or Foursquare.
Ride the startup alone (like David Karp) or with someone with whom you know, you will come to work. Otherwise, the separation could be painful and cost you a lot.
Enjoy (a little too much) nightlife
The world of start-ups organizes numerous events and parties that help develop its network. Some founders focus on the network and end up not working enough anymore. Find a happy medium.
Persevere while your start-up does not work
You have resigned from your job because you have a brilliant idea and are sure that it will work.
Except, it fails. And now?
First, you should never resign before having a chance to test your concept and be sure there is a chance that it works. However, even knowing this, it is difficult to predict the future of your start-up.
Do not be afraid to break everything to rebuild better
You may not have exactly the way your customers will use your product. It’s also possible that customers hate a new feature you love.
React quickly, and do not be afraid to break everything to rebuild better. Do not stick to a start-up idea just because you fell in love with it. Make the most of what works and turn it into a full-fledged company or make a radical change. Some of the largest companies that exist today rely on the ashes of failed start-ups.
Not knowing how to communicate and ignoring criticisms
When you have a well-defined start-up idea in mind, it can be difficult to explain it properly to your audience.
Stay constantly open to dialogue and force yourself to listen to critics. Learning to manage employees takes a lot of work. If you do not learn to communicate properly, you will destroy your relationships with your customers and employees.
To be greedy
A smart entrepreneur knows how to stop negotiations promptly.
Many start-ups who made the buzz have refused offers of acquisition of $100 million.
Foursquare could have been sold for $150 million while she had barely raised $5 million. The video-sharing start-up Qwiki has declined a sale offer of $100 million and could now be sold to Yahoo for only $50 million. Google had offered a generous offer to the Path application, but its founder Dave Morin refused.
This applies especially to entrepreneurs starting a start-up for the first time: take advantage of an opportunity that will change your life. Keep the grandeur craziness for your next start-up.
It may be wiser to sell your business for a smaller amount than several hundred million dollars. An outflow of $20-30 million will require less time and external capital than a $200 million sale.
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