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 :
- “Drinking Your Own Kool-Aid” – Overestimating the Enthusiasm for Your Product/Service – thinking your product is more special than your customers perceive.
- Not Validating Market Demand – thinking that your product is a “winner” before making sure you get a solid base of people who agree
- Starting to Work with Customers Too Late – only engaging with customers when the product is ready for sale.
- Underestimating the Difficulty in Penetrating the Market – not expending enough effort to reach customers and to get them to try the product.
- 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.
- Underestimating the Effort Needed to Build the Product – promising to get to market before you can actually finish the product.
- Hiring the Wrong Kind of People – hiring “big-company types” who are used to having a support staff to help them do their work.
- Not Focusing – being tempted by side projects and spreading yourself too thin to focus on developing your company’s main value proposition
- Not Pricing Correctly – under or over-pricing the product may inhibit adoption.
- 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:
- 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.
- 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.