Doing business is a matter of trial and error. But how do you prevent things from really going wrong with your start-up?In this article we give you 7 tips to avoid the most common start-up fails.
#1. Don’t be a copy
Many start-ups are imitations of an already existing company. That can be a nice starting point, but it often doesn’t lead to the best idea. How do you do this better? By finding a specific, unsolved problem that you yourself are struggling with. Or by seeing one in society.
Take a specific user in mind. Create a buyer persona. What’s his problem? You need to know and understand your user. Find people and talk to them. What are they complaining about? What do they want? With a shared value or a shared pain, the customer will feel more connected to your product or service. It then feels like it was really made for him or her personally.
Also, don’t be afraid of any (crushing) competition. This shows that you have something good in your hands. You can only avoid competition by avoiding the good ideas. But then you may not have something really good on your hands.
#2. Align your team
Many entrepreneurs start out on their own, but soon enough notice that they will need to work with others. The rule of 1+1=3 definitely applies to a start-up team, because as an entrepreneur you need someone to brainstorm with, someone to challenge you, complement you, etc.
However,discussions between the founders and other team members are inevitable. Many discussions arise because doubts are suppressed from the outset. Try to avoid situations like this before they become a problem and plan regular meetings where you go into more detail.
“People often say co-foundership is like getting married. What they don’t say is that only a few people know how to date well.” – Gleb Budman, CEO of Backblaze.
Many entrepreneurs think that you just need to have a clever idea and then have good people execute it. But it’s not that simple. Because how do you choose the right people when you don’t have those specific skills?
Three suggestions for hiring staff:
- Don’t do it if you don’t have to (no shit, Sherlock!).
- Take a look at alternative compensation instead of a standard salary.
- Take on priority positions first, don’t waste money yet if you don’t need to.
- A pool of freelancers is a good stepping stone to building a team.
- Always hire people who have more or different knowledge than yourself.
#3. Choose a prime location
The three golden rules in business real estate are “location, location, location”. Think of McDonald’s. You will find one in every busy place in the world. Why? Because McDonald’s always wants to be close to its target group: people who want a quick, cheap bite to eat.
As an entrepreneur, you can learn a lot from this: first of all, make sure your start-up is present in the right place. Location is important, but the story has to be right too. Make sure the location is in line with your product and target group. You don’t have to have a physical presence in all the countries and metropolitan areas where you operate, as long as your product gets there.
#4. Keep your finances in order
There are several ways to raise funding. At some point you will need financing, but how much exactly? Too little money can kill your start-up, but what about too much?
Once you have secured too much funding, it becomes more difficult to change your course as a start-up. Large investments take a lot of time. Investors are there to make their money pay, of course, but they can also have important advice. They will challenge you and not just nod yes, but that will also make you have some healthy stress. They also just want to know what kind of entrepreneur they have in front of them and that they can trust you with their money.
Be frugal with your money. The classic way to burn it is to hire too many people. This cuts both ways: it slows down your operations and you suddenly find yourself with sky-high (labour) costs. Labour costs are simply very high in Belgium, so you have to take that into account. Also pay attention to the ‘useless’ costs in the beginning: a big and fancy office, expensive office chairs, expensive company cars, …
#5 Go to the market on time
You’re never 100% done, so don’t keep waiting and get to market on time. That’s the message. If you miss the train, it’s gone without you. Many companies have a hard time getting their product or service to market at the right time. You want to strive for perfection, but you can never achieve it if you don’t get feedback from users.
You need to launch something as soon as possible, even if you’re not proud of it. “If you’re not embarrassed by the first version of your product, you’ve launched too late,” Reid Hoffman, co-founder of LinkedIn, once said. Your product is never finished, and you’ll never learn what’s good/bad about your product if you don’t talk to your customers and gather feedback.
Work with short iterations:
- Do you have any ideas? Then make a powerpoint presentation, explaining what you do.
- Then create a landing page or a simple website, where interested people can leave their email address
- Then you start with a prototype and those first few customers. You test your product/service and the market against each other. You learn a lot from that.
- Then gather feedback and improve your product.
In this way, you always build a better product, and you don’t risk working on your product for 3 years, only to launch it too late, or to find out that nobody actually needed it. A late launch has probably hurt a hundred times more startups than an early launch, but it’s still possible. And of course, an early launch is not without its dangers: it can destroy your reputation. You launch something, the early adopters try it out and if you go completely next to the ball, they never come back…. But that’s the risk you take as an entrepreneur.
Too often we forget that failure is the best way to learn. It’s better to do the fail, than to do nothing. The biggest mistake people make is just doing NOTHING. Always having a great or genius idea, but ultimately not doing anything with it, is wrong. You have to do something with it, and the chances of it failing are high. But you will have learned a tremendous amount from it, and when you start something the second time, you will definitely not make those mistakes again.
#7. Never accept “no” as an answer
Running a start-up is not easy and there are always people who will tell you that something is impossible. Listen to feedback, but never confuse criticism from the outside world with established facts. Also, always be critical of the feedback you have received.
While building a start-up, it is crucial that you believe in your idea for 100%. Your confidence will be tested several times. Therefore, never underestimate your potential and ambition and make sure you stand firm and are surrounded by a constituency that supports you. A mentor who coaches you and can serve as a sounding board, or just someone you can ‘spar’ with is invaluable.