Most startups will fail, it is the nature of the industry, but with risk comes reward, and with great risk comes great reward.
By actually taking the steps to build your own startup you are already halfway there, most people fail to even reach the starting line.
Most budding entrepreneurs believe that getting the capital required to fund their idea is the hardest part of being an entrepreneur, but the truth is, it’s only one of the hurdles you need to overcome to be a successful entrepreneur.
If you are at the stage of looking for capital, you should take a look at our pitch deck template to understand exactly what we, as Venture Capitalists, are looking for when evaluating new opportunities. So you’ve got your seed money, and your startup is now beginning to take shape, what are some of the most common pitfalls that first-time entrepreneurs fall into?
I believe that three fundamental aspects entrepreneurs need to remember when building their business are:
1. Understand what users want
A common pitfall of entrepreneurs is building something users don’t actually want, need or are willing to pay for. Understanding your users, what their problems are and how you can solve their problem(s) is critical; get specific.
Launch your idea quickly and listen to what users are saying so you can test as many iterations as possible. It’s often better to get a few users to love you than to get a lot of ambivalent users. It’s also a good idea to build ideas based on your own experiences – many successful startups were based on problems that their founders experienced personally.
2. It takes (the right) team
While going lone ranger may sound appealing to some, in reality, founders need team members to brainstorm with, to provide objectivity, and to provide motivation when things don’t go to plan (which is inevitable).
A good entrepreneur is able to see the gaps in their own expertise and is able to hire the right people to fill those gaps.
Choose your team carefully, bad hires are expensive. Hire those that are flexible enough to allow for healthy debates, imaginative enough to push boundaries and those who truly share in your belief and vision for your startup.
Also, hire people you actually like and can have open conversations with, after all, the life of a startup is never smooth sailing so it’s always helpful to have the right people on deck to help you weather the storms.
3. Spend only what is needed
It’s a classic situation, especially with first-time entrepreneurs, that as soon as you receive the funding you want to get a full dream team together, but it’s important that you only spend what is absolutely needed, particularly when it comes to who to hire.
It’s also a good idea to include some sort of equity agreement with your team, not only will this assist you to save money, but it’s also a way to incentivize and motivate employees. Getting a startup off the ground is no easy feat, so ensuring that you have the right people with the right incentives is critical.
In the beginning, only hire those who can either help build the product or find new users. Minimize expenses with the goal of getting ramen profitable i.e. earning just enough to pay the founders’ living expenses.
You should have a plan in place for how much market testing you need to do to prove your business case, and how much that testing is going to cost you. Spending the right amount of money on the right amount of testing in the beginning phases of your startup is crucial and way more important than office space, business cards or building a big team.
Succeed in the three points above, and you’ve got the foundation for a successful startup. The main thing to remember is that it takes a lot of hard work and dedication to become a successful entrepreneur, and you should make sure you have the right advisors and investors on board to ensure you have the greatest possibility of success.