Early stage startup founders go through a lot of chaos. There is a pressure to get the product out, meet potential investors, hire people and importantly, learn the art of sales/acquire new skills.
Over the last few days, I’ve met several early stage entrepreneurs and this article is a summary of few (soft) mistakes that I see entrepreneurs committing. By calling these as soft mistakes, I am excluding mistakes related to building the right product/finding product-market fit/hiring etc etc.
Note that these mistakes mostly won’t have an immediate impact, but will (suddenly) show up when you least expect them to!
Startup Mistake #1: Attend workshops organized by angels/investors on ‘how to raise money’.
It’s not that Investors have wrong intention, but it’s just that entrepreneurs shouldn’t be learning funding tricks from them.
It’s as good as going to a lion’s den hunting for breakfast; or to learn ‘how to eat dinner (and not be a dinner)’ organized by Lions and Tiger Academy.
Startup Mistake #2: The Echochamber of 4F.
The early stage of any business is full of chaos. You have a hypothesis, but don’t know how to go about validating it.
The product isn’t ready, there are hardly any resource$ to deploy and validating the hypothesis becomes all the more difficult.
And here is what you are probably doing (the easy way out): Asking Friends, Families and Fellow Entrepreneurs for validation.
THAT’S SOME SERIOUS MISTAKE YOU ARE MAKING (AND I mean the CAPS) : [Read : Friends and Family – Are they Startup’s Best Friends?]
What’s the fourth F, if you may ask? Well, that’s the F**k word – because that’s what you are doing with your product/idea by talking to the 3Fs.
Remember that Friends, Families and Fellow Entrepreneurs have no clue about your vision/product concept – they will support you because they want to see you succeed. But they aren’t really your customer base – so stop collecting feedback from them.
Startup Mistake #3. Equity For Everything.
So you need a development partner. You have very little money, so you start trading equity.
You do the same for your office space. Same for your sales consultant, for your investment banker.
All of this looks like a smart *bootstrapping* strategy, but this will come back and bite you when you start riding the growth wave.
There will be very little room for investors to play around – the business will be viable as far as model is concerned, but just not attractive enough for investors.
Startup Mistake #4. Delaying Decisions.
In India, it takes a while to do anything substantial. Unlike Silicon Valley which has a great combo of early adopters/customers, things in India are different.
Persistence definitely pays (look at Justdial), but foolishly driving without the right sense of direction doesn’t help much [Read : P for Pivot OR P for Persistence?].
Typically, we Indians often delay hard decisions, unless we hit a do-or-die situation.
Startup Mistake #5. Not Defining Cost/Expense.
First, understand that the cost of product development/launch is not just the cost of developing it.
For instance, a lot of early stage entrepreneurs calculate the cost of product as the cost of external services employed to make it live (for e.g. designing logo, development cost etc).
As an entrepreneur, if you don’t value/put a $number to your time (rather, opportunity cost), how will you value others’ time? Why do you expect others to put right value (and valuation) for your business fairly?
BONUS : Your Money is Your Money. Keep it.
Ofcourse, most of the early stage entrepreneurs mix personal and company money. There is just no time (and reason) to do it otherwise, you’d argue.
But a clear accounting process really helps – otherwise you stand to be taken for ride by your CA and even stand a chance to get rejected by Investors for lack of clear process [Read : The Value of Data Consistency in Fund Raising.]
Always remember that your money isn’t company’s money and company’s money is DEFINITELY not your personal money. And this also means that it’s just okay to take salary from the company to meet your basic needs.
Also, checkout some of the great insights shared by Indian technology entrepreneurs on ‘Startup Mistakes’
Image credit: shutterstock