The process of starting a business brings excitement to entrepreneurs. Yet first-time business owners must navigate through specific challenges which they will encounter during their journey. Most startups fail because their founders choose incorrect priorities which they pursue at inappropriate times. The ability to recognize these typical mistakes makes it possible for a business to grow successfully or face extinction within its first year.
Building in a Vacuum
The most common mistake is spending months building a product before talking to a single customer. Founders often develop attachment to their business vision which leads them to believe they understand what customers need to buy from the market. The company learned too late that they developed a product which solves a problem that nobody actually has.
Scaling Too Early
Many founders assume that business success requires them to establish large teams and operate from luxurious office spaces. The process of premature scaling leads to expenses which drain financial resources before the business model reaches operational status. The company should continue its small operations until it achieves product market fit and customers start paying for its services.
Hiring for “Experience” Over “Agility”
First-time founders attempt to recruit workers who have experience at major firms like Google and Amazon because they believe that corporate status will benefit their company. The employees who work at large organizations need to operate within their assigned responsibilities. The startup environment demands workers who can handle multiple roles and work quickly while organizations need to provide management support to their specialist employees.
Ignoring the “Boring” Legal Stuff
Founders spend their time creating logos and slogans while they forget to create the documents which establish their ownership of intellectual property and business partner relationships. The startup will face destruction through internal conflicts which arise from unclear ownership rights and decision-making process when legal documents fail to establish ownership rights and decision-making authority.
Misjudging Cash Flow
Founders often confuse revenue with profit or cash reserves. Your company will face bankruptcy risk because your customers take three months to process their payments even when you achieve strong sales performance. Business owners must constantly track their company expenses which represent their monthly cash outflows because failure to do so results in a critical mistake.
Falling in Love with the Solution, Not the Problem
Your vision for your product will prevent you from discovering superior solutions that will resolve customer problems. Founders who achieve success maintain their dedication to solving customer problems through their business operations. They will change their product entirely when a better solution becomes available to them.
Fear of Competition
First-time founders live in constant anxiety that a major corporation will take their business concepts without permission. The founder will maintain secrecy about their organization through stealth mode of operation. The business world operates on execution as its primary determining factor for success. The secrecy approach prevents you from acquiring the necessary feedback which builds essential business relationships.
Neglecting Sales and Marketing
Many founders believe that if they “build it, they will come.” This is almost never true. The best product cannot succeed when you lack a customer acquisition strategy which includes purchasing processes.
Undervaluing Their Own Time
Founders attempt to manage all business operations by themselves to avoid spending on services which require payment. The result leads to complete exhaustion. The founder must focus mainly on creating high-level strategies which will drive business expansion. If you are spending 10 hours a week on $20-an-hour tasks, you aren’t acting like a CEO.
