The traps you want to avoid falling into – Part 1
This article will list some of the “traps” I have encountered in my journey as a founder. These are some of the most frequently committed errors in judgement that startup founders can make in their startup’s early phases. These are also the things I think that impede a startup’s growth significantly.
This is going to be a two-part piece. Here are the first set of things I want to point out:
Not focusing on profitability
Let’s get this straight: You need to make a profit from early on in your journey. In the end, it doesn’t matter how good your product is if you can’t make it financially successful. It is the first thing any investor will want to see in your financial projections. Contrary to what you may have heard from others, it’s absolutely essential to focus on profitability in the early stages to allow your business to grow. At least to some degree. Also, do not forget that your profits will obviously have a positive impact on your product. It will enable you to give customers an outstanding experience, build trust in your brand, and to collect data about your customer base. It will simply make you greater.
Spending too much time on marketing
I’m not a big fan of marketing—I’ve never been. Marketing doesn’t create value. It usually only solves second-order problems. Unfortunately, marketing is the biggest cost for startups, which prevents them from paying attention to their business model and the rest of their operations. In the end, when your focus shifts from innovating the core product, you’ll just be selling a “commodity” to people that will not excite them after a while.
Being too tactical instead of practical
Trying to be too tactical than it is necessary is often the cause of a startups downfall. For an early startup, an approach that is not easily comprehended or that is too reliant on intricate strategy complicates things. If I am ever asked to judge a startup, I would use the following criteria: It has to have a great idea. It has to be exciting. It has to be easy to understand but also out of the box. I need to “want” to use this startup to solve a problem I’m facing. That’s the “tactical” formula needed for success. Nothing more complicated.
Not deepening on your subject area
Some startups are in fringe industries where there is often little competition or sometimes even knowledge. But, it is still important to know what you are doing. The founder’s aim is to deliver the best product. In order to do it, the importance of knowing/studying your niche/industry cannot be overstated. Especially when you are the only player in town who is attempting to do something in that market. Or maybe you are creating a new market with your product.
Not understanding your customer
When founders take a step back and take a deep breath, they often see that they need to do more to understand their customers. If you don’t, you will likely run into the same problems that your competitors run into. If you do try enough to know your customers, you will gain great advantage. When you launch your product, it’s really important to understand the people you will be selling your product to. Which do they have in common? What is their pain point? Every business needs to work to serve their customers’ needs. If you aren’t helping your customers, they’ll look for someone who will.