Launching a Successful Startup: Common Mistakes and Pitfalls
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Noting that a high percentage of startups fail, the two experts in entrepreneurship and intrapreneurship encouraged viewers to learn from the most common missteps and know where you’re most likely to encounter danger.
Counting down, these are:
10. Competitive landscape
The rapid pace of change today is accelerated by factors including the COVID-19 pandemic and the Fourth Industrial Revolution. Fors encourages today’s startups to conduct PESTEL assessments — analyzing “political, economic, social, technological, environmental and legal” factors — at least every three to six months.
Lepech says it’s important for entrepreneurs to expand the scope of what constitutes a competitor. It’s not just organizations with similar products. The competitive landscape includes alternative solutions that offer a similar value proposition.
Identifying the size of your opportunity and segmenting it appropriately, with customization for each group, is a crucial move for startups. If startups ever catch themselves saying that “everyone” is their market, they’re waving a big red flag to investors, according to Lepech.
Too often startups emphasize product at the expense of deeply understanding their financials. In order to attract investors, you need to generate trust, and doing your due diligence around the numbers will help establish your operation as a trustworthy opportunity.
There are a couple of potential pitfalls for startups related to rolling out products. Carefully identifying features and differentiating the company’s offering in the marketplace is essential for success. Startups must often balance the need to keep their feature sets trim while maintaining a whole-product model, inclusive of additional services like training and support.
6. Technology disruption
While startups are often seen as disruptors to dominant economic structures and large companies, they also need to watch out for a world where technology is changing underneath their feet, too.
Fors says the Fourth Industrial Revolution offers new opportunities for companies that provide truly original and innovative products. At the same time, with the rapid pace of innovation seeming to accelerate every few months, these businesses need to pay careful attention to new players and emerging trends.
5. Customer needs
Create an elevator pitch that uses whatLepech calls the traction sandwich: Position your pitch between two proof points about traction. If you can demonstrate that customers actually need a product and are willing to pay for it, everything else will flow from there.
Startups also need to talk directly to their customers and early adopters to learn from them. You can’t assume you know what your customers need.
4. Research and development
Startups often underestimate the cost of research and, to an even greater degree, development. Fors notes that entrepreneurs need to have an in-depth understanding of how much it might cost to move from initial research to prototyping and scaling — if the ultimate goal is even achievable in the first place. Sometimes a great new product can be created, but without the capability to scale it, it can’t go to market.
3. Leadership team and company culture
It’s difficult to overstate the importance of leadership and culture. Getting this formula wrong can have more negative consequences than almost any other problem. It’s not uncommon for the leader who got an organization started and funded to not be equipped to push the company forward. Knowing where and when to hand over control or recruit new leaders while cultivating a thoughtful culture can help avoid future turbulence.
Agreat team can always adapt, but a poorly functioning group will squander even the best opportunities.
2. Customer acquisition
Here’s a quick reminder: You’ll actually have to spend time, money and effort to attract, convert and retain customers.
It may seem obvious, but too many entrepreneurs trick themselves by thinking, “If I build it, they will come.”
Marketing, sales and segmentation need to be built into the plan. Things don’t just “go viral,” notes Lepech. Companies make virality happen.
According to Fors, there are a couple of traps that startups frequently fall into related to scale:
- Thinking too small: If you really do have a big idea, you should have large-scale ambitions that match the promise of your product.
- Trouble expanding: Startups have to position themselves to achieve their desired outcome incrementally, adjusting their product offering, strategy and financials one region at a time.
During an open Q&A in the second half of the webinar, Fors and Lepech discussed a wide variety of viewer-generated questions. Some of the topics included:
- Entrepreneurship vs. intrapreneurship
- Startup activity in emerging economies and post-conflict countries
- How to select leadership and executive teams
- Launching a startup without having a technical background
This webinar was presented in tandem with the Stanford Idea-to-Market Entrepreneurship Program. If you're looking for additional insights about how to make your business idea a reality, consider enrolling today.