The 28 Most Common Early-Stage Startup Mistakes

Startup Mistakes

Business is common sense. You’d be surprised how successful you can become just by expertly avoiding big blunders. To help you achieve this, we’ve compiled an exhaustive list of the most common early-stage startup mistakes:

Table of Contents:

1. Startup Team Mistakes

1.       Lack of domain Experience

А startup is successful based on its innovation and effective differentiation. You cannot be a step ahead of an industry if you are not heavily exposed to it either professionally, or as a customer. That’s why one of the best things you can do in order to choose the right startup market is to be involved with new technologies and markets.

Of course, tech and marketing experience is also highly desirable for an early-stage startup team. Being up to date with the best practices in the industry will help a great deal.

2.       Internal conflicts

One of the most common reasons for startup failure is conflict among the founders. Choosing the right cofounder is crucial – keep in mind that if your business starts growing, you’ll spend more time with this person than with your spouse. You probably wouldn’t get married on the first date, so don’t start a business with a person without getting to know them first.

The best way to avoid internal conflict is to make sure that, first, you have the same values. And second – that you have the same vision and expectations of the future.

If you are pulling the project in different directions, it wouldn’t survive.

3.        Lack of a clear agreement (and legal structure) among the founders

The structure of the agreement with your cofounders (and early employees) needs to be set before you shake hands. What would the equity split be? Is there going to be a vesting period? Are you going to take ownership of different parts of the project responsibility-wise?

4.       Unavailability

An early-stage startup requires a lot of effort. If your life can’t accommodate this, usually because your time is occupied by your full-time job and family, you’re chances to succeed are lower. That’s why a lot of successful startup founders are either at an early stage of their life (college, etc.), when they don’t have a lot of other responsibilities or at a later stage in life once the founders have achieved financial security and can afford more easily to invest the required time and resources in the new project.

Even if you can support such a lifestyle, it’s unlikely that your cofounder(s) would be able to do so as well. With time, if one of the cofounders is doing a lot more work than the other, this could easily be the seed of a future internal conflict.

5.       Burnout and lack of long-term motivation

A lot of pop entrepreneurship content emphasizes working on your passion. True passion and enthusiasm, however, are very hard to sustain in the long run. They are intense once the project is new and exciting, but they quickly fade away when the difficulties start amounting.

Because of this, it’s better to build your motivation on work and progress that you find meaningful and that aligns with your values, rather than what you find emotionally satisfying in this very moment.

Moreover, building a startup is a long-term battle, so your lifestyle needs to be sustainable. It’s better to make slow but steady progress than to burn yourself out in a few months.

6.       The one-person startup

One founder = a single point of failure. A lot of experienced startup investors avoid one-person startups or advise them to involve a co-founder ASAP.

Just like raising a child, building a new startup is a very hard job to pull off on your own.

2. Startup Product Mistakes

1.       Building something the market doesn’t need

Undoubtedly, the main reason for early-stage startup failure is the lack of product-market fit. That’s why your first order of business after you get a startup idea is to test it. The best way to do this is to run idea validation tests and to pay careful attention to the results.

2.       Not talking enough to clients

Without a doubt, the best way to offer something that people need is to talk to them. Decide what kind of person is a potential user of your product or service and immediately get in touch with such people. Communicating your ideas with them will show you if you’re on the right track to product-market fit.

Once you find your first users keep in touch with them personally. They are going to reveal the true nature of the problem you are trying to solve, which will help you nail down the ideal offering.

3.       Not iterating and pivoting until you feel a pull from the market

Once you see a clear signal from the market, you need to follow it. Don’t get attached to your ideas – they are unlikely to be perfect from the very start. Allow real customer feedback to modify your vision – iterate on your offering until you see very strong positive signals from your users.

If the market signals are weak – pivot. Once you’re on the right track to PMF, you’ll feel a pull from the market – people would genuinely be interested in your offering.

4.       Building something that’s not differentiated enough

Competing directly with the established companies in a market is simply not going to work. They have more resources than you, so they will win in a direct clash.

That’s why you need to approach the market from a new angle by creating a unique offering.

Your goal is to become a monopolist in your own market niche. It’s much more realistic to win 90% of a new market niche than to win 10% of an established one.

5.       Not using KPIs

Working on a vision is great, but in order to stay grounded in reality, you need to choose tangible metrics that represent the results of your efforts. This is the key to investing your time and resources wisely in the early startup stages.

The most important KIPs are usually usage metrics that show if customers are deriving real value from your offering. Such metrics are usually leading indicators of good financial performance.

6.       Bad execution

Of course, if you do what you are trying to do badly, this will hurt your results. There are two main reasons for bad execution.

The first one is lack of technical expertise – you need to make sure that your team has the needed skill set to achieve your vision.

The second one is biting off more than you can chew.  In the early startup stages, your resources are very limited, so you need to spend them wisely. It’s better to do a bit less but to do it well rather than to spread yourself too thin and execute badly because of it.

3. Startup Marketing Mistakes

1.       Trying to appeal to a very broad market

Trying to please everyone often results in pleasing no one.

The ideal early-stage startup product is a single-feature product that solves a single (acute) problem of a particular group of people who can be reached through the same marketing channel.

In other words, you need to choose your minimum market segment (MVS), to figure out how to serve this segment, and how to reach it most effectively.

2.       Believing that you’ll build it and they will come

This is a common saying in startups that you can safely assume is entirely wrong.

Yes, a good product will incentivize word of mouth (in most markets). However, you need the initial critical mass of users which will make the word-of-mouth-driven growth meaningful. This critical mass is usually obtained from your direct sales efforts.

Moreover, this saying represents a deep misunderstanding of what the process of building entails. In order to build it (the product) correctly, you need to be in constant communication with them (the customers). As mentioned, without their feedback you’re extremely likely to build something no one needs.

And if you are constantly looking for customer feedback, you’ll automatically be doing as much selling as building, which is a healthy balance.

3.       Too vague promotional strategy

Again, you don’t have a lot of resources. This means that your startup marketing strategy needs to be well-thought-out. You can’t afford to spread yourself too thin. You need to choose the most effective market channel for your core market segment and to become extremely good at using it.

4. Startup Tech Mistakes

1.       Building something for too long without customer feedback

We already mentioned that by far one of the biggest mistakes you can make is to invest a lot of resources, time, and efforts to build a polished product without staying in touch with the market.

If you are a tech person you’ll be tempted to spend most of your time coding and tinkering with your solution. However, you need to realize that talking to customers is just as important as building.

2.       Over-investing in tech

And if you are not a technical founder, your biggest expense would likely be to pay developers to build your solution. However, you need to be careful – according to the Startup Genome project, the biggest reason for startup failure is premature scaling, which means behaving as if your startup is at a later stage than it is.

Before product-market fit, it’s prudent to be as lean as possible, because you’ll have to iterate and pivot often.

3.       Building an over-complicated solution

The best number of features is one.

The more complexity there is in your startup as a whole, the more likely it would be to fail early on. As a small team with few resources, you simply cannot afford to deal with a lot of complexity.

Because of this, it pays dividends to be as focused as possible in your early offering.

4.       Lack of sufficient tech skills

If you are a junior developer, you need to be honest about your skill level. Moreover, even if you are an experienced developer, you can’t be skilled at all tech stacks and all domains.

Biting more than you can chew is an easy way to build a sub-par, barely-working product.

To deal with this – ask for help, and ideally attract a person with the required skill level.

5.       Over-reliance on outside solutions

If your product is entirely reliant on an outside API to provide value (e.g. it’s built using Instagram’s API, etc.), then you need to be fully conscious that changes in said API could destroy your business in a single day. Derivative tech leads to derivative businesses.  

5. Startup Financial and Fundrasing Mistakes

1.       Not keeping track of your burn rate

The early stage of your startup is a battle against time. You need to work as fast as possible in order to discard the bad ideas, iterate, and find product-market fit. If you fail to do so before your money runs out, you’ll be forced to close your doors.

That’s why failing fast is vital – we already covered that. But it’s also why keeping your burn rate as low as possible in the early stages could be the difference between success and failure.

2.       Fundraising too early

Unless you have an extremely impressive CV, the times when you could raise money just on the back of an idea and a good pitch deck are mostly over. Nowadays, startup investors are a bit more sophisticated and they expect you to show good evidence of product-market fit.

The right strategy is to try to bootstrap your project until you manage to validate your product or at least your idea and to fundraise only once you have solid PMF proof.

3.       Wasting a disproportionate amount of time and effort in fundraising

Fundraising takes a lot of effort and time, and the opportunity cost of this time is high. If you’re not fundraising, you could be working on building and selling.

Because of this, you need to be conscious if fundraising is the right way to spend your time. As mentioned, early on it usually isn’t. Your first job is to make your project an attractive investment by showing real progress. Afterward, attracting investors would be much easier and would require a much lower investment of time and effort.

4.       Not knowing how much money you need and what exactly you’re going to use it for

Are you sure you need funding? Money is not equally important in the different startup stages.

If you truly need it, how much, and what are you going to use it for?

You need to have a clear answer to these questions for your own sake, but also because startup investors expect that you do once you get in touch with them.

5.       Using debt as a source of financing

Business loans are great for financing traditional businesses with predictable cashflows. Early-stage startups, however, are the exact opposite, and financing through debt could easily kill your project before you get to PMF.

Startups are financed through equity for a good reason.

6. Startup Legal Mistakes

1.       Trademark and IP problems

This one is pretty basic, but you still need to make sure not to mess it up. Use Google to make sure your brand names are not trademarked and that the assets you use in your offering aren’t someone’s intellectual property.

Finally, don’t worry about patents in the early stages. Filing for patents is a cumbersome and somewhat expensive process, so it doesn’t make sense to go through it before you are certain your offering has good PMF.

2.       Not incorporating at the right time

You need to incorporate before you raise your first round of funding or before you start generating meaningful revenue numbers (whichever comes first).

Doing it earlier than that is not a mistake, but it could prove useless if your project falls through in the very early stages.

3.       Permits, licenses, etc.

Be careful of industry-specific permits and licenses. If you’re building a software project you won’t have to worry about that, but e.g. if you work with food, you need to be careful.

In Summary

The cheapest lessons are the lessons learned from the mistakes of others. Make sure to avoid the above mistakes, and you’ll be on the right track to building a successful startup.

At VisionX Partners our goal is to be a realiable and experienced partner for your startup project, abolishing the chance to make basic startup mistakes!

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Abdo Riani

Abdo Riani

Founder & CEO of VisionX Partners

VisionX Partners is a startup development company that works with entrepreneurs to start, build, market and run their startup from the ground up through product development and design, marketing, and a dedicated operation and growth team.

Kyril Kotashev

Kyril Kotashev

Entrepreneur & Contributor at VisionX Partners

Kyril is a startup founder, content marketer, and writer. Learn more about his work and reach him through his website.

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