5 Terrible Mistakes Startups Make and How to Avoid Them

Every successful venture goes through challenges from financial constraints to bad debts but knowing these common mistakes that many entrepreneurs make will put your startup ahead for success.

By Derick Mwanguhya
Published: November 21, 2023

You finally made up your mind to quit your 9-5 job or you’re just interested in becoming an entrepreneur, there is a lot to expect from success to failure.

And did you know that 9/10 startups do not succeed? And remember 10% of new businesses don’t survive the first year.

But if you think about these mistakes, you have a higher chance of succeeding because they can determine your move.

Let’s dive into it.

Undermining your finances.

You might have heard from friends that starting up a business requires you to break the bank.

But did they tell you that you can start with the little you have?

We all agree different businesses require different sums of capital but starting a blog will not huge sums of money as starting an ATM business.

Small Business Trends found out that 1 in 3 business owners begin their small business with less than $5,000.

After you have realized which business you are to start, don’t overlook capital you’re to start with but rather use the same as inspiration to keep you moving and with time you will make a profit from what one can despise at first.

Ignoring a business plan.

Many startups disregard a business plan for their businesses because they often think this is for big business. But a business plan is a vital tool for every business.

A business plan is a detailed document about the business, showing the name, address, means of operation, source of funding, and other important financial statements.

Having this plan at hand when starting up can guide your business in making important and meaningful decisions for the business’s growth and even secure funding from venture capitalists and well-wishers.

According to CBInsights, the second biggest reason why startups fail is due to running out of funding and personal money.

Therefore, if you like your startup to stand out of the crowd, start working on your business plan now.

Doing it all yourself.

We all love going sole in life but if you want your startup to flourish, then it’s high time you thought of getting someone to work the journey with.

Although Entrepreneur reports that 23% of startups mentioned team issues leading to failure, Small Business Trends says two founders can increase the startup’s success rate by 30%.

“Experience alone does not make a team successful — soft skills such as “entrepreneurial passion” and “shared strategic vision” are required as well.

Harvard Business Review

While we agree that some individuals have made it a man strategy and have been successful, this may not be you, that is why a co-founder may greatly help your startup to succeed.

Of course, we have different ideas and personal traits, what you can do well, I might do it the worst way. But you are two, one can share a strategy that might help the startup to go through a crisis, withstand competition or even secure the next grant.

As your startup expands, you’ll find it hard to do everything alone, thus, think now and choose the best person who can appreciate your business idea and work towards its growth.

Not knowing the target market.

Did we forget the worst mistake startups make? No, we didn’t. Many startups enter the industry without even identifying who is their target audience or which type of market are they targeting. This is because many just want to make money but they don’t know that money comes from their target audience.

Meanwhile, the number one reason why startups fail is because of misreading market demand and you are also having misleading market targets, you are on the path to failure

You need to study your audience, from their preferences to challenges that may limit their purchasing power.

“4% of startups fail due to not regarding customers’ needs.

Fundera

This will help you design the best products or services that suit their needs and demands.

Take an example if you are targeting low-income earners for your new Apple brand Shop, would this make sense? Probably No. Because we all know Apple products may not be fair in price for low-income earners.

This should give you an idea. If you are still wondering how to find your target market ask yourself the following questions;

• Who can spend on your product or service?
• How much do they [buyers] earn and how do they spend their earnings?
• Where are they [buyers] looking in terms of location and accessibility?

You have an idea of the questions; you can generate more questions to figure out who are your buyers. Then you’ll be on your way to a successful venture.

Fast profit mindset.

It would be unfair if we wrapped up this without pointing out the terrible mindset many entrepreneurs hold when launching their startups.

Many entrepreneurs think starting their own business gives them the privilege to enjoy huge profits. But this is not true

Of course, 15% of startups fail because of pricing or cost issues according to CBInsights.

Yes, as an entrepreneur you’ll enjoy 100% of your earnings, but I hope you heard me right, “earnings”. So, profits do not come when you mention that you’re starting your boutique, but they come when you source funding, source for quality and trending outfits, promote your boutique, and finally close a deal.

And this does not come in one day as many entrepreneurs think but it takes time, courage and persistence.

Therefore, if you are ready to move forward with your startup, think of your customers’ journey, your unique selling point and how are you going you attract customers. Then profits or even abnormal ones will come in later.

Final Thoughts

Your startup might be failing because of one of these or maybe all of them, but it is not always late to revisit your plan, make an audit, and come up with ways to overcome the challenges.

Do you think of any mistake that we might have not included here, let us know

in the comment section, and we’ll be glad to update this article.

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