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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