Mistakes are a part of life and can particularly hurt startups, due to their size and dependence on funding opportunities. Although there is no way to avoid making mistakes, amongst startups of all sizes, some notable trends emerge which can help startups understand and avoid common pitfalls. Rather than an exhaustive list, this list is designed to help guide startups around painfully common mistakes.
5: Belief versus Reality: Time to Confront Data
This seems like a no-brainer but it’s a common mistake for startups of all sizes. Even large companies far prey to the idea that anecdotal experiences, stereotypes or unfounded assumptions are more powerful than data. For instance, many are familiar with the famous mistake that Blockbuster’s CEO made of passing up on an opportunity to purchase Netflix for $50 million in 2000. There are countless other examples of such mistakes, like Yahoo’s decision not to purchase Google and Facebook when it had the opportunity.
The importance of talking about these examples is to realize that statements like “There is no reason anyone would want a computer in their home” (attributed to Ken Olsen, the founder of Digital Equipment Corporation) represent a lack of vision, but more importantly, a failure to transcend one’s expectations and beliefs and look at actual data.
In many cases, these predictions were made before a product or industry took off or before products and industries came to resemble what they are now, making it even more important to carry out research and review research that was already done to determine the viability of a business decision or product choice before making the judgment that it would “never work.”
4: 20/20 Vision
This next mistake is intimately related to the previous one. Sometimes, changes in the market, technology or the economy (to name a few factors), present new opportunities to change a business model or a product/service. It’s important to decide which changes are and aren’t worth pursuing, however, an even bigger mistake than taking on changes that aren’t well researched or effective is the refusal to accept change at all.
Every idea or concept seems absurd at some point until it’s implemented and successful. While startups may not be the first to ride the waves of newfound success when certain products or markets take off, they should be open to the possibility that their tried and true methods of operation may change, sometimes dramatically. There should be some part of any startup team that can creatively envision changes to their product and that is always imagining what tomorrow could look like.
3: You Forget Competitors are People too
This mistake is easy to make for startups at any stage of development. For longer-standing, more successful startups, it can occur when startups are so successful and make such great returns that it almost seems like the only limit they have is self-imposed. It can also happen with new startups that are so focused on getting off the ground and surviving, that they ignore external threats and competition. It can even happen to startups in the middle who’ve finally found their “balance” and have been lulled into a false sense of momentary security.
It’s important to remember that while a particular product, service or business model may be solid and successful, someone may do it better, for less and in a more efficient manner. There is more to success than having a great design and execution. Startups should dedicate the time to keep abreast of industry trends and get to know their current or potential competitors.
2: It’s Nothing Personal
Accepting negative feedback and implementing changes accordingly is vital for successful startups. Negative feedback isn’t personal and can actually help startups avoid pitfalls. This doesn’t mean that every single complaint or piece of advice should translate into changes in a startup’s products or design, but rather, that an open forum, surveys and other ways of reaching customers (or potential customers) should exist for startups to collect important data and re-evaluate choices based on feedback. Praise and positive feedback are normal, but will only stroke egos, startups need to know why people aren’t buying or aren’t interested in buying what they bring to the table as well.
1: Failing with a Purpose
It’s an ugly word and for good reason. Failure is more than a psychologically stressful experience, it’s profit loss. With that, livelihoods and jobs are lost, sometimes entire startups are lost as well. While failure doesn’t mean that an idea, product or service wasn’t good, it does mean that somewhere in a startup’s plan, execution, design or environment, there’s an issue.
The biggest mistake startups make is not failing or even fearing failure. Rather, the biggest mistake they make is failing to learn from…well failure. Failure doesn’t necessarily represent the end (although it’s understandable that losses to funding and integrity can mean the end for a particular venture) so much as they represent a chance to reassess a business model, better understand a market and learn important lessons.
Even if learning from failure doesn’t mean a startup can be saved, these lessons are vital to future endeavors and maybe even future startups. In that sense, the end is never truly the end.