Startups do fail, at early stage and even after raising some substantial amount of funding. But some mistakes are common to some of these failed startups. We just want to look at those possible mistakes in the course of this post.
Presuming everyone thinks your idea is brilliant
Startup entrepreneurs fall into the trap of presuming everyone will definitely fall in love with their awesome idea. The question you should be asking is: do these set of people – investors, potential users/customers, early users, friends and family – care about your idea? Maybe not. But your friends and family would choose to care, just to show you some love.
The best approach to know that your idea is great is to know that it’s actually solving a problem for people or businesses and get feedback from early users. Look at your idea from the angle of a potential user.
The urge to sell or generate revenue
Of course, revenue generation is key to any business, but should selling take the front burner?
There are companies that didn’t focus their attention on revenue generation in their first year or more, that ended up doing great. Twitter is a typical example here. The initial focus should be about bringing value to your clients and users or providing a solution to their problems.
Why should I want to buy your product if I don’t actually feel the need for it? It’s the value in your offer – a tailored offer.
Analyse potential clients/users’ needs, and build your solution around their need. The need that they would be willing to part with their money for.
Thinking that every need is worth satisfying
Have you crossed that last hurdle on the urge to generate revenue by all means? That we have a problem with power supply in Nigeria and trying to build your solution around it can be great but, do our neighbouring countries like Ghana have the same problem?
Aside the scaling limitation in the above scenario, it might turn out that only a few people actually need such a product.
The fact remains that, not every single need of a user/client is worth addressing. Scalability should be treated with utmost priority. Are there enough prospective users that will be willing to pay for your product?
Identify the problem you want to address and analyse whether it’s really worth solving. And will they be ready to use it if they won’t even pay?
Thinking that all-in-one products are better
The logical view for some startups is that having a product that can serve everyone is potentially viable, but it actually might not be so.
There’s almost a Google version of every productivity and social tool on the internet, but of course, I still use those of the competitors – I could stick to only Google products, and that’s if am a Googler.
Reaching your perfect user/client could prove difficult if your solution covers a wide range of diverse products with no specialisation – a jack-of-all-trades solution.
Don’t try to solve every problem, find a niche and work towards getting the best out of it.
Funding: time and reason
You have a brilliant and bankable idea that won the hearts a few investors, but behind winning their hearts is the need for such investment as well as timing. These are some of the questions you could try to answer in the event of seeking investment:
What is the valuation of the startup? Does the business ideology of your potential investor align with your company’s? Is it the right time to get the external funding?
Should you take funds to validate your business idea? No.
That you will get a favourable valuation for your startup has a lot to do with the maturity as well as the traction you have been able to pull.
The best period to look out for investment is when trying to accelerate the scaling of your business, and not validation of product-market fit.
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