Five Common Startup Mistakes
The path to successful entrepreneurship can sometimes seem uncharted, and many of the obstacles along the way can seem bewildering and completely original.
But here’s something every business owner learns in time: They aren’t. When a new company stumbles, these stumbles have almost always happened hundreds of times before, often to other entrepreneurs who found a way to resolve the issues and keep moving forward.
The secret to overcoming most common startup challenges isn’t really a secret; it’s just a matter of placing the issue in a context and knowing you aren’t alone. The right legal counsel can help. Here are some very common mistakes that a strong legal team can help you address.
1. Turning to VCs too soon.
Venture capital can be a huge boon for your business, but if you’re not yet off the ground and making money, you may not be ready to reach for this high rung. Explore other options first, and then try this route when you’re able to test, scale and prove your profitability. VC term sheets also vary dramatically. Make sure that when you start talking to VCs, you know what terms you want, and that business interests are aligned.
2. An unscalable business model
A successful business that can attract enterprise clients and investors at all levels should be able to scale in a smooth, elastic way. Make sure your company has built the right systems to ensure the right scalability. If you don’t, the investment money you’ve taken to scale and grow isn't going to do anything.
3. Lack of product diversification
Trusting your entire future to one product or one limited capability can slow your growth later on. Diversity your product and service portfolio to hedge against market trends.
4. Insufficient marketing
Marketing isn’t just about selling your product to customers. You may have total faith in what you produce and you may want to believe your product sells itself, but that’s rarely the case. You’ll need to market your idea (and/or prototype) aggressively from the earliest stages of the process to attract customers.
5. Hiring the wrong people
At every stage of your growth from the first day to the last, you’ll need to hire competent, personable people who can execute the tasks assigned to them. But at the very beginning, you may also need to hire team members who have the patience to endure ups and downs, the risk tolerance that startups require, and the willingness to accept compensation packages that may include articles of faith, like stock options. If you don’t actively seek these qualities, you may experience expensive turnover.