20 Common Mistakes Early Startups Make


According to the data published by the United States Bureau of Labor Statistics, 20% of companies fail within the first years of their operation. Nearly half of all enterprises die before reaching their fifth year of operation too. So, what steps do you take to establish and operate your startup successfully?

The following are the top 20 mistakes that startups make, as determined by our interviews with hundreds of small company owners, growth strategists, financial advisers, legal experts, and business consultants. We compiled this list to help you avoid making the same mistakes when launching your startup in the future.

1. Too Afraid to Fail

Failure is the most dangerous thing you can fear, and this is the worst error you can make. Failure is essential to your success, and facing your fears may be highly beneficial to your future business endeavours. The ability to bounce back from failure and learn from your errors is the key to achieving tremendous success.

2. Insufficient Domain Expertise

A startup’s success is determined by its ability to innovate and differentiate itself from the competition. You will never be able to stay one step ahead of an industry if you are not highly exposed to it professionally or personally. As a result, becoming connected with new technologies and markets is one of the most effective things you can do to select the most appropriate startup market.


On the other hand, technical and marketing expertise is highly desirable for a startup team in its early stages. Being up to speed with the best practices in the business will be quite beneficial in this situation.

3. Not Establishing a Clear Business Plan

Too many businesses get off the ground without even an essential strategy in place, and if you don’t prepare, you’re effectively preparing for failure. Even if it is only one page long, a business plan should be developed by a startup. In addition, it should include information on how much it costs to run, how much they estimate selling, and who would be interested in purchasing their product and why.

4. Not Being Organized

Being well-organized is essential. Running a small business is a lot like being the ringmaster of a circus. It is typical to have a slew of things happening at the same time. As a result, I have a daily task list with items that I need to complete. And I categorise them according to their importance. It appears to be easy, yet it is effective and allows me to be more productive.

5. Launching as a One-man Startup

Having only one founder means having only one point of failure. A large number of seasoned startup investors steer clear of one-person businesses or urge them to bring on a co-founder as soon as possible.

So do not attempt to start a new business on your own. Find and bring on board seasoned advisers that are trustworthy and willing to discuss your business ideas, strategy, obstacles, and progress. Wisdom and strength may be found in a plethora of sources of advice.

Encourage four to six individuals to join your organisation as advisers to obtain regular input and, as a result, reduce the likelihood of mistakes occurring.

6. Not Knowing Your Market and Audience

A classic startup mistake fails to devote sufficient effort to researching and understanding the market or clients you are building. When it comes to technical founders, developing code might seem more straightforward than talking to consumers. Still, there’s no way of knowing if you’re on the right road unless you’re gathering input from existing and prospective customers regularly.

It’s critical to understand that creating a fantastic product does not always equate to creating a successful business. Many businesses concentrate on a market that is simply too tiny to support a large scale enterprise.

7. Creating Something that the Market does not Require

The absence of an excellent product-market fit is unquestionably the most common factor for early-stage startup failure. That’s why, if you have a startup idea, the first thing you should do is put it through its paces. The most effective approach is to conduct validation tests and pay close attention to the outcomes.

8. Not Registering Your Business with the Proper Legal Framework

Yet another most common mistake that new businesses make include failing to register their company or brand, choosing the incorrect business entity, and safeguarding their intellectual property. These three areas are critical to getting a firm off to a good start, and if they are not completed correctly, it will take a lot of time and money to rectify the situation.

9. Getting the Wrong Investors

Entrepreneurs should be aware of this essential piece of advice that they should know before beginning a business: their investors are more than simply money backers. The initial group of investors in a company will determine whether the organisation will succeed or fail.

These folks invest their trust in the company’s potential even though they have not seen proof of idea. If a company has completed its seed fundraising round, it will subsequently connect with investors to evaluate its growth and long-term viability.

10. Waiting Until the Market Pulls You to Iterate and Pivot

You must act upon a clear market indication. It is important not to become emotionally connected to your ideas because they are unlikely to be flawless from the start. Make adjustments to your vision based on genuine consumer input – iterate on your product until you receive solid positive feedback from your users.

If the market’s signals are weak, it’s time to change course. The market will pull you in if you are on the correct path to PMF. People will be genuinely interested in what you offer once you are on the proper approach to PMF.

11. Avoiding Contracts

One of the most costly mistakes a company owner or entrepreneur can make when beginning a firm is failing to put contracts in place as soon as possible. When processes and agreements are not in place, no matter how intense the bonds between people are, they can come to an unpleasant end.

12. Hiring too Soon

Another most common error that startups make is recruiting workers too soon. For example, the most common mistake would be hiring full-time employees when a part-time employee would be more appropriate or hiring an individual when a subcontractor might have performed the same job/function. It is pretty simple to manage a small business with the help of part-time employees, subcontractors, and the services of other specialists.

13. Over-Investing in Tech

And, if you are not a technical entrepreneur, your most significant investment will almost certainly be the money you spend to hire engineers to construct your solution. However, you must exercise caution since premature scaling is the most common cause of startup failure, according to the Business Genome Project. Premature scaling refers to acting as if your startup is at a later stage than it is.

Because you’ll be iterating and frequently pivoting until you find product-market fit, it’s wise to keep things as minimal as possible.

14. Wasting Money

For companies with limited access to financing, handling money poorly and careless with cash flow is a death sentence. When it comes to hiring people, I’ve made the error of employing too many of the wrong individuals, and I’ve spent too much money to cover the top of the funnel without having a well-defined procedure for managing the bottom of the funnel.

Putting good money to terrible use and attempting to be everything to everyone instead of being a specialist in a particular sector is a sure-fire way to waste vital time and money, which are the lifeblood of any new business venture.

15. Giving Yourself the Wrong Salary

Overpaying yourself or underpaying yourself are both mistakes to make. It is frequently simpler to calculate the wage of a recruit than it is to establish the income of an owner or a partner. Consider rewarding yourself with a share of your profits. Whatever you decide, make determining your compensation and the payment of your partners a habit that serves as a foundation for a healthy expectation of management.

16. Undervaluing Your Product or Service

First and foremost, ring the cash register. Prices should not be set too high, but they should also not be too low to acquire market share. If you’re good, you should get a reasonable price! Many entrepreneurs begin with the best of intentions and give goods out for free and volunteer their time for charity, the community, or to get exposure. You must use extreme caution in this regard, as you do not want to become regarded as a supplier of freebies.

17. Launching too Quickly

It is one of the most common blunders entrepreneurs make when they launch before they are ready. However, while the saying “done is better than perfect” sounds advising enough, the “done” must be able to manage additional clients before it can be considered complete.

Ensure your procedures and processes are in place once your business has been released to the general public and you have begun receiving clients. This includes payment terms and techniques, contracts, and communications while continuing with your overall marketing approach. Before you start accepting clients, you must ensure that your back-end processes are flawless; if they aren’t, it will be evident that you aren’t serious about your business.

18. Expanding too Quickly

When you begin to see results, it is simple to believe that the trend will continue, and the most effective approach to increasing profit is just to copy and paste your successful technique. However, the truth is quite the opposite: if you grow your business too quickly, it might have disastrous effects. It is possible that your moment of expansion was just short and that you will find yourself with a large number of new employees but no job and no finances to pay for them. That is why it is critical to take a patient and methodical approach to growth rather than acting based on a string of positive results.

19. Lack of Sufficient Tech Skills

If you are a junior developer, you must be completely honest about your degree of expertise. Furthermore, even if you are a seasoned developer, you will not be proficient in all technology stacks or domains.

Biting off more than you can chew is a sure way to end up with a defective product and barely functional. To cope with this, seek assistance and, preferably, attract a person who possesses the necessary skill level.

20. Hiring Wrong People

For the various roles you’ll be looking to fill, the candidates will require different skill sets and backgrounds. When you first start, make sure you have a team of hardworking, all-around generalists capable of doing everything you ask of them. When your company starts to develop, you should consider recruiting skilled people in jobs that require a specialist. You shouldn’t employ a generalist when you need someone who has specific expertise, and you shouldn’t hire an expert when you could hire a generalist to do the task.

Bottom Line

To build a successful company, you must surround yourself with experts and advisors who can provide guidance and support as you grow your business. Even though you should avoid various beginning failures when developing your brand, mistakes are unavoidable, and you should moderate your expectations accordingly.

Learning from the mistakes of others is the most cost-effective method for improving one’s performance. As long as you avoid making the mistakes listed above, you’ll be well on your way to creating an extremely profitable business venture.

Author Byline:

Lekshmi S is a Digital Marketing Associate working in NeoITO– a reliable web and mobile development company in the USA. She always seeks feedback from tech founders, product owners, and business strategists to write about subjects valuable to her readers.


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