New startups are born out of the desire to push boundaries, upend the status quo, and create genuine new value for customers and founders alike. While it’s tempting and sometimes necessary to follow Mark Zuckerberg’s advice to “move fast and break stuff,” startups in a hurry to break out into the limelight may find themselves on unstable foundations.
This guide focuses on the pitfalls all too many startups fall into during their initial stages. They decrease efficiency while jeopardizing your business’s long-term sustainability. Read on to learn how to identify and overcome these pitfalls.
Not Having a Business Plan
It’s all too common for startup founders to focus on refining and realizing their unique ideas in the moment while neglecting long-term outcomes. Disruptive ideas and grand but vague vision won’t impress investors—doing your research, developing realistic projections, and demonstrating your business’s long-term sustainability will.
Start by assessing the current market and the competition you’re up against. What customer demands aren’t being met, and how will your products and services make a difference? Create feasible financial and growth projections, as well as analyze potential setbacks.
Imprudent Spending
Successfully getting through initial investment rounds may leave your startup with large cash infusions and insufficient experience to handle the funds responsibly. It’s not just the stereotypical spending on new offices or fancy distractions. Startups may overhire to preempt demand or order too much of their product to be made without having proper sales channels or gauging realistic interest first.
Budgeting is crucial for continued startup operations. It lets you assess differences between income and expenses and pivot accordingly. One way is to focus on efficiency, developing methods to boost productivity and results with the people and resources at hand. Another is to create a buzz to attract investors and customers to revitalize your revenue streams. A combination of both yields the best results.
Not Being Mindful when Hiring
A common trap startups fall into is to hire fast and indiscriminately after their takeoff. The impulse makes sense—there’s finally enough money to expand your team and take some weight off the founders’ shoulders, and you’ll need more hands on deck as the company grows anyway, right?
Problems arise when you don’t take the time to vet candidates thoroughly. Experience and the required skillset are just the start. You’ll want candidates who are also a good fit for the company culture you’re building and who can adapt and grow with the increasing scope of their work. Fine-tuning your hiring process now increases the likelihood of acquiring compatible, productive talent that can form the backbone of your company in the future rather than jumping ship at the earliest opportunity.
Micromanagement
Nurturing a startup through the earliest stages of its development may feel like caring for an infant. It’s no wonder that some founders have a hard time delegating after being responsible for everything themselves. Yet, not trusting the people you hired to do the work responsibly can lead to friction and resentment. Besides, micromanaging day-to-day tasks is hardly the most efficient use of your time. It leads to mounting opportunity costs that may hurt your business in the long run.
As a leader, you’re responsible for ensuring your team has everything they need to do their job. This means securing project management and communication tools to help allocate responsibility, speed up communication, and maintain efficiency even if everyone works remotely. In addition, you’ll want to create an atmosphere where everyone feels comfortable asking for guidance and speaking up about inefficiencies or issues long before they become serious problems.
Lack of Cybersecurity Awareness
Whatever your startup sells or offers, data is its most valuable commodity. You may not have many tangible assets yet. However, every intellectual property, marketing campaign, and customer database holds confidential or personally identifiable information cyber criminals want. Founders too preoccupied with other aspects of running their startup or unconcerned due to their supposed insignificance end up paying the price.
Integrating cybersecurity from day one is an indispensable prerequisite for long-term startup sustainability. Your most important digital assets need to be backed up and encrypted, with restricted and monitored access. Careless behavior can undermine the most sophisticated digital defenses, so make sure employees are aware of phishing and other social engineering scams. You’ll also want to use a team password manager, to generate one-of-a-kind credentials for everyone’s accounts.
This reduces the risks of data breaches and account takeovers while allowing team members to securely share logins or seamlessly access digital tools from different devices.
Conclusion
It’s no secret that the vast majority of startups end up failing. The competition is high, and customers might not be receptive to your idea. You can’t do much about external conditions and market whims. However, if you keep the outlined mistakes in mind and strive to avoid them, you’ll gain the edge needed for your startup to have a fighting chance.