8 mistakes entrepreneurs make at the early stage of their startup
Entrepreneurship is like creating a new path from scratch, which is one of the toughest jobs in the world. The failure rate is high, and there is no guarantee of success. But that doesn’t mean you should give up on your desire of becoming an entrepreneur. As an entrepreneur, you should have passion and vision to bring a positive change, plus it’s necessary to know mistakes entrepreneurs make in order to not repeat them.
Keeping that in mind, Gayatri Kapur, the co-founder of Mudraka.com, has shared mistakes entrepreneurs make at the early stage of their startup, which should be avoided.
1. Not writing a business plan
A business plan is essential to keep the larger picture in mind. Small businesses and startups usually get caught up in a day to day issues which can obfuscate the final goals. However, many times, things don’t pan out the planned way, which is why I believe that a business plan cannot be rigid. It keeps changing based on opportunities and challenges which appear.
For example, when we founded Mudraka, our plan was to establish a marketplace for outdoor advertising products. Where our vendors would list and sell directly to the customers. But when we started doing that, we encountered unexpected issues. Our vendors belong to the unorganized segment which makes it very difficult to achieve standardisation in packaging, billing, and quality. Thus, we had to change our business plan multiple times to tackle these issues.
2. Lack of financial quotient
I’ve seen entrepreneurs, who spend a huge amount on things which may not positively impact the revenue like spending a substantial amount on a fancy office. The initial set of funds should ideally be used for things which directly contribute to revenue. Such unwanted spending hampers the growth of a young startup.
Also, one mistake young entrepreneurs commit is that they underestimate the amount of required funding. Because sometimes it takes a lot longer time than anticipated to generate profits/ raise funds. Thus, many budding entrepreneurs end up spending all of their funds, which leads to forceful wind up of their business.
3. Working with founders with the same skill sets
Ideally, co-founders should have complementary skill sets, but their business goals should be aligned. If partners have complementary skill sets; each of them can lead different business verticals such as operations, marketing, finance etc. This is more important when the business is small, where it’s difficult to hire competent employees.
4. Spending without measuring ROI
It’s one of the mistakes I see often. In the times of hugely funded businesses which offer heavy discounting, it is easy for small businesses to get influenced and follow the same. Heavy discounting, and spending on marketing channels without measuring the impact on business can be very dangerous; as young entrepreneurs might find themselves out of funds, which can force them to shut their business.
5. Lack of delegation
Scaling up is not possible without delegation. If a startup is unable to scale up, it will have to be wind up.
If founders get stuck in the day to day operations without delegating some of their responsibilities, it will distract them from their key engagements to expand, innovate, and identify more opportunities for their business. That said, it is a huge challenge for a startup to hire competent people on a limited budget.
6. Getting impatient
Most startups don’t pan out as per the initial plans. There are many unexpected roadblocks which may cause delays. Therefore some entrepreneurs get impatient and give up, but I believe that perseverance is the key. I think entrepreneurs need to be extremely passionate and enjoy what they do. Else, it’s very easy to give up.
7. Hiring without looking for conviction in the candidate
I believe hiring is one of the biggest challenges of a startup which has not received a huge funding. Most candidates prefer a cushy job where their roles are pre-defined and limited. Working with a small startup is very different where every team member is expected to contribute in many ways. The goal for every entrepreneur should be to hire candidates who have conviction in the business.
8. Focusing too much on raising funds.
One of the biggest mistakes an entrepreneur can make is to start a business with the sole objective of raising funds. It is important that the business should be fundamentally sound. Funding can be part of an expansion plan, and not the business plan itself. Also, raising funds at a very early stage can lead funders to dilute their stake too much which can be demotivating in future.