By Maksym Babych, founder and CEO of SpdLoad, the software development company for startups.
Founding a startup is by no means an easy task. Making the startup thrive is even more difficult. In my years of experience as the founder and CEO of a leading software development agency, I’ve noticed some mistakes most founders make, chief among which are:
• Failure to analyze your target market
• Launching your product too early
• Overlooking hidden expenses
• Ignoring the concern of users
• Not seeking help from outside sources
But before getting into the nitty-gritty of these mistakes, I’ll educate you on the ideal thought process behind startup formulation.
Conceive An Idea For A Startup
An idea is a set of business hypotheses put forward to solve a specific problem to target consumers to get financial rewards for the solution provided. The idea stage is crucial to product development because it is what determines investor interest in your business and the viability of your startup.
In helping startups grow over the past few years, I’ve noticed that the most viable ideas are those that follow an idea development process such as:
1. Conducting brainstorming sessions with team members
2. Analyzing each idea and assessing its strength
3. Analyzing the competitor’s market
4. Streamlining the idea and refining it
However, it’s not all that simple, as there are mistakes to watch out for.
Let’s discuss this as well.
Common Mistakes Startups Make
A recent statistic by the Bureau of Labor suggests that only 80% of businesses survive after one year. By avoiding the following mistakes, your chances of success improve drastically.
1. Failure To Analyze Your Target Market And Audience
This mistake can leave your startup with dire consequences, which can be:
• Poor competitiveness
• Marketing to the wrong consumer base
• Weak product demand
• Wrong business model
Early-stage startups should spend a longer time validating their target audience before launching a product. This will help them have a better understanding of their target market needs.
2. Launching Too Early
Consider the following before launch: Is there a market for this service or product? Are you ready to market it?
If you answered no to those questions, then you’re launching too early.
The consequences of launching too early entail:
• Poor user retention rate
• Recurrent errors
• Poor user experience
Although it’s equally not worthwhile to launch your product or service late, you can balance your timing by creating a service with minimalistic features and limiting it to a specific niche or geographical area—this requires less financial and labor demand.
It also requires fewer features, thus, you can develop a quality solution fast.
3. Ignoring Multiple ‘Hidden’ Factors
Hidden factors are cost-influencing properties that are not readily observable and affect the overall price of developing and maintaining a product.
For example, maintenance cost is not easily estimated as it varies with the development team, the tech stack and other factors. Beyond maintenance, additional costs include marketing, updates, etc.
Ignoring hidden costs leads to the following:
• Higher financial stress
• Out-of-control spending
• Dissatisfied investors
• Poor marketing plans
• Unscheduled downtimes
To avoid this mistake, hire a CTO as a service that understands the intricacies of your workflow and the hidden costs involved.
4. Not Being User-Centric
Being user-centric entails putting the product consumer at the heart of the development process. Here, the startup prioritizes the needs and experience of the product users over the desires of other stakeholders, i.e., investors.
This mistake is synonymous with startups just setting out. Early-stage startups tend to create solutions tailored for the sole purpose of raising funds. This lack of user-centricity creates a myriad of problems, some of which are:
• User dissatisfaction
• Poor retention rate
• Low usage
You can prevent this by having pre-launch surveys about your product and timely incorporation of users’ feedback at all post-development stages.
5. Ignoring External Assistance
External assistance is help obtained from outside your in-house team. This help can be from the government, hired consultants and mentors.
Problems emanating from ignoring external help entail:
• Easily avoidable mistakes
• Unscalable business model
• Poor growth
Mentors are a good and vital source of guidance for startup founders, as they help provide experiential advice that can help them achieve their immediate and long-term objectives.
Now that you’re acquainted with common mistakes made by early-stage startups, what tips can aid rapid growth?
Tips For Launching A Startup
It’s best to factor in the following tips before and during your startup launch:
• Have a marketing budget
• Find a reliable partner
• Intelligently interview prospective employees
• Create an MVP before launching a full-scaled product
• Adopt a reputable monetization model
Chances are high that your startup will achieve considerable success if you adopt these tips.
Based on my evaluation of the statistics, startups have about a 20% chance of success, and these statistics show that early-stage startups are at high risk of failing. This high failure rate is due to several mistakes, which have been discussed in this article. However, if you make an adequate budgetary plan, hire the right skills and adopt an ideal business model, you can brighten your chances for success.