UPDATE: The article has been updated keeping in mind the changing business scenario in 2019.
Globally, around 92 percent of the Startups fail within the first three years of its operation. The reasons are multifarious and sometimes incomprehensible to the founders. Times of Startups has come up with the list of top 5 Startup mistakes which can help Startups identify them in their life-cycle and take remedial measures.
1. Being deaf to suggestions
Building an empire on your own is something everyone strives for and there is nothing fundamentally wrong with the idea. But in reality, it takes few extra hands to build an ‘entrepreneurial empire’. When you begin your venture, you will find people giving you all sorts of suggestions. One way of going about is being completely deaf to the suggestions. “Why the hell should I listen to them. They don’t want me to succeed”. This, unfortunately, is the wrong way of going about. Listen to the suggestions given by your friends and family. Don’t think as if you are wasting your time. Ultimately you are the one who will make the final call. But in the process of listening to people, you will start formulating a multidimensional strategy around your Idea. Few things you never thought could come out of no where.
2. Premature Scaling
In order to understand what premature scaling is, it is important to understand what scaling means. When a Startup experiences growth in its operation and either expands its role, hires new employees, spends more on advertisement or all together, it can be said that the Startup is Scaling up. Usually, but not always, this is accompanied by higher returns. Scaling up is never bad when it is a well thought of decision and the various factors are taken into account. But in reality many Startups suffer when they try to stretch their legs too far. Sometimes, even though an entrepreneur is completely bootstrapped, the temptation to grow in a short duration lead him to invest in those aspects of business could have been avoided at that moment. It could be either hiring expensive app developers when your website is not performing well or hiring employees in excess of your needs. One should avoid spending money scaling the business before one has already nailed what customers want and how to reach them.
3. Having no or insufficient social media presence, and handling your social media poorly.
Though a very basic point, many Startups have failed to make their social media presence felt across the various platforms available. And needless to say, they have suffered big time. At a time when entrepreneurs are running short of ideas, a slow or a negligible social media presence can cost you dearly as the niche market can be easily captured by your competitors if they have a more robust social media presence. It is also important to understand this aspect from the mindset of a potential client. Once you have shown your interest in any product’s social media page via likes, subscription, you are less likely to like a page of a similar product. Facebook and Twitter age entrepreneurs who have missed this point have suffered dearly. Also, of utmost importance is the manner in which you handle your social media. Posting few and pertinent things on your social media platforms instead of bombarding your followers with posts is the best way to go. You can read how Startups can effectively use social media for their advantage here.
4. Not having a backup plan
“I have 2 eggs. From the two eggs I will have 2 hens. From the 2 hens I will have another 8 eggs..Finally I will have a big poultry farm”. Well, planning is good but sometimes our plans fail. It is a hard fact of life. In the world of Sartups, things are very dynamic and the competition immensely intense. Not having a backup plan is like preparing to fail. It absolutely doesn’t mean that you remain less upbeat about your venture. Having a backup plan only means that you are aware of the ground realities and are ready to face any challenge when it comes.
5. Being a copy cat
“Even though Flipkart was present, amazon and Myntra are doing pretty fine. I think my Online store, which will sell ‘only’ kurtis will also be a hit.” Barring few exceptions, most of the successful entrepreneurs are those who have tried to solve personal problems or problems which are unique in different ways. Hotmail was the result of Sabir Bhatia and Jack Smith not being able to exchange email at work. Google happened because Larry and Sergey were not able to find things online. There are numerous examples to support the argument. The limited point to be taken home is that creating a business around your own set of problems can help you in creating a niche which can grow exponentially.