Tech Startups: Mistakes You Want To Avoid


Having passion, vision and motivation are some of the prerequisites when entering the world of startups. The Harvard Business Review writes that two-thirds of startups never show a positive return. This kind of figure can be alarming especially if you’re a startup.

It is normal for tech companies to encounter issues. Just like any other business; cash flow, product-market fit, vendor selection and the like can be problematic.

In this article we will discuss common startup mistakes you want to avoid to get ahead of the competition.

Immediately Jumping To Build Mode

Most of the time we think: “I can do this, just do it”. What this really means is: I have money and skills and friends that are on board, so I’ll just build what I have in mind.

It’s very easy to admire the passion and courage in this kind of decision. But as we stated earlier, approximately 70% of startups fail and the most common reason they do is because they build something people don’t need right now.

So while it is brave and courageous to immediately jump into build mode, is like jumping out of a plane knowing that there is a 70% chance of your parachute not opening.

One of the best ways to avoid a failure is to use the Lean startup methodology. It helps entrepreneurs solve this problem by providing parachutes, skydiving altimeter and even goggles and helmets that help you avoid crashing.

The variant of skydiving without a parachute is developing a prototype too soon. This is when you create something in order to prove that you can do it before others can do it. What this means is: “I have this idea and I have the skills to build it. Therefore, I will build it to see whether it is feasible or not”.

Developing a Prototype Too Soon

However, just because you can build it, does not mean to say that there is a market for it. After having a new business idea or product, it is better and cheaper to start validating customer problems that a proof of concept may intend to solve.

If you find that you don’t have problems that are big enough then you have either targeted the wrong market or built the wrong product.

Writing a Business Plan Immediately

Many businessmen think that it is best to write a business plan as soon as you have a good idea. In most cases, business plans are long documents. It is a detailed plan on how you plan to execute your idea and what the financial impact would be for years to come (sometimes up to 5 years!)

There are 2 problems with this. First, nobody is going to read a very long business plan. If nobody has time to read it, then why are you going to spend time writing it? Secondly, if you’re idea is something innovative, then wouldn’t it be hard to make a plan for it and make forecast for financials?

Unless the business is an established one, a business plan is just a paper full of assumptions. Also, what if an investor sees this plan and invests? They will think that you can execute everything in the document that is full of invalidated assumptions and that you can replicate this in real life complete with financial results that you made up.

Instead of writing a business plan, just start doing business properly and validate the riskiest assumptions quickly in the cheapest way.

No Focus

Passion and ambition can sometimes lead you to a bad place. There are many entrepreneurs who are filled with visions for their business. These visions if properly executed and embraced would probably have made the world a better place. However, passion and ambition can also make you restless; jumping from one idea to the next.

In fact, there are some businessmen who launch project after project without pause and sometimes at the same time. While this is admirable, having no focus can make businesses fail.

For instance, you might be focused too much on launching businesses you don’t have time to look after those that are already standing. What problems are they experiencing right now? Are they still on the green?

Expanding the Team Quickly

Startups are usually full of enthusiasm and creativity. Working together is fun but sometimes it can be difficult. Expanding the team too quickly could lead to altered team dynamics and tension. More people mean more personalities to deal with.

Instead of adding team members too soon, stick to a lean team for as long as you can. Define a value proposition, test and validate it on the market. Avoid adding members until you have a clear picture of who you need on board.

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