Fast Company

10 Common Mistakes That Startup and Small Companies Make

Young companies have small margins for error. Mistakes made early on can sink a company before its gets off the ground. Below is a list of 10 common mistakes made by young, small companies. In the list below, I use the generic term “product” to refer to either a product or a service.

Over the next few posts, I will expound on these ideas; for now, here is the list :

  1. “Drinking Your Own Kool-Aid” – Overestimating the Enthusiasm for Your Product/Service – thinking your product is more special than your customers perceive.
  2. Not Validating Market Demand – thinking that your product is a “winner” before making sure you get a solid base of people who agree
  3. Starting to Work with Customers Too Late – only engaging with customers when the product is ready for sale.
  4. Underestimating the Difficulty in Penetrating the Market – not expending enough effort to reach customers and to get them to try the product.
  5. Overestimating the Product’s Uniqueness – related to “drinking your own Kool-Aid” this refers to not taking competition into account, where competition can be another product or service, or whatever customers are using today.
  6. Underestimating the Effort Needed to Build the Product – promising to get to market before you can actually finish the product.
  7. Hiring the Wrong Kind of People – hiring “big-company types” who are used to having a support staff to help them do their work.
  8. Not Focusing – being tempted by side projects and spreading yourself too thin to focus on developing your company’s main value proposition
  9. Not Pricing Correctly – under or over-pricing the product may inhibit adoption.
  10. Not Having a Long-term Vision That Scales –having a “one-trick pony” that does not lead to future sales

In the entrepreneurial spirit of “under-promise and over-deliver,” here are two more mistakes young companies make:

 

  1. Never Finishing the Product – the “never time to do it right, but there is always time to do it over” syndrome. Constantly redo-ing the product but never finishing it.
  2. Not Offering Employees Enough Fun – sadly, a common quality of many startups – despite what you read in the pubs.

Disclaimer – as the veteran of six startup companies (two that were successfully sold), these are mistakes I have seen time and again. If you have some additional ideas, feel free to comment.

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34 Comments

  • Calislami

     

    tidak boleh menimbulkan sikap malas bekerja, apatis, acuh tak acuh, dan tidak mau berusaha. Kesalahan memahami takdir akan menimbulkan anggapan bahwa manusia itu ibarat robot sehingga tidak mempunyai daya kekuatan dan kekuasaan sedikit pun.

    Ke

  • Calislami

    P

    Percaya atau Iman kepada takdir
    Allah

    hendaknya dipahami dan diyakini dengan hati-hati dan didasari dengan iman yang kukuh, pengetahuan yang luas, dan ikhlas sehingga tidak menimbulkan pemahaman yang salah atau terhindar dari akidah yang menyesatkan

    rcaya atau Iman kepada takdir
    Allah

    hendaknya dipahami dan diyakini dengan hati-hati dan didasari dengan iman yang kukuh, pengetahuan yang luas, dan ikhlas sehingga tidak menimbulkan pemahaman yang salah atau terhindar dari akidah yang menyesatkan

  • Calislami

    “ m

    “ mempercayai secara sungguh-sungguh terhadap segala ketentuan dan ketetapan Allah yang berlaku bagi semua ciptanNya. Ketentuan tersebut adalah baik yang telah terjadi, sedang terjadi, maupun yang akan terjadi”.

    empercayai secara sungguh-sungguh terhadap segala ketentuan dan ketetapan Allah yang berlaku bagi semua ciptanNya. Ketentuan tersebut adalah baik yang telah terjadi, sedang terjadi, maupun yang akan terjadi”.

  • Chris Meyer

    http://meyerpublications.com- this is a great blog, I really like most of the material that is put out by this magizine. in this day and age it is hard to start fresh but with jobs being no so out there any more it would be a good idea to think of something you can do to start your own business.

  • Selectabase

    In our experience of working with many start ups, good advice is to halve your forecast of sales in the first year and double your anticiapted costs!

  • cingru

    David, thank you so much for a great comment.These points certainly are pertinent not only for a start-up but for every business to consider as they do regular business planning. All of the ideas will keep you grounded in your thoughts.

    regards,

    Cingru
    http://cingru.co.cc

  • Jim Bullock

    Very good and informative article. I would only add that another common mistake is under-captialization at the start. Many new companies find themselves caught in a cash flow crunch as they expand as business takes off.

    Jim Bullock
    http://www.business-money-sour...

  • Smash Hit Displays

    Very true. The one I would like to touch on is # 7 - Hiring the wrong kind of people. Your employees are supposed to be the voice of your company and if they are very negative and unenthusiastic about your company, they can only do more damage than good.

  • Ginny Montanye

    I have to agree with #7 also, I learned the hard way not hiring the right people to start. Lesson I will remember.

  • David Lavenda

    Passion is definitely a critical success factor. When you putting in those long hours, taking back-to-back red-eye flights, and getting the door slammed in your face, it is really important to believe in what you are doing. I have yet to meet a successful entrepreneur who wasn't passionate about "the cause." Definitely a "necessary but not sufficient" entrepreneur quality.

  • David Lavenda

    Passion is definitely a critical success factor. When you putting in those long hours, taking back-to-back red-eye flights, and getting the door slammed in your face, it is really important to believe in what you are doing. I have yet to meet a successful entrepreneur who isn't passionate about "the cause." Definitely a "necessary but not sufficient" entrepreneur quality.

  • Debra Joy

    Great post David. I agree with all of your points. I worked in venture capital with many young companies and have started a few myself. I think another point relates to #8. I would say that starting a business to make money and not because you are passionate/interested in the business is a big mistake. Most businesses take more money, energy, time, and other resources than anyone thought necessary. Will you have the passion to stick with it when all looks grim?

  • Thomas Bailey

    I agree with all the comments above regarding the excellence of the post. One thing that all new companies, and many established companies, need to focus on is speed to the market. The market’s need is ever changing. Sometimes the pace is slower as in industrial products, however, the window of opportunity must always be reckoned with.

  • David Buffaloe

    All great points, especially #2 Validating Demand. Another item to consider is Understand Your Limits. Many entrepreneurs think they can do it all. I would say focus on the things you are good at, then look to other resources to fill the holes. The other item is to understand the value of marketing from the very beginning. Build the marketing foundation you need to position yourself as a viable player in the market and it will pay off in the long run.