Small businesses fail — a lot. According to a Business Insider report, an estimated 50-70% of small businesses will fail within their first 18 months. I know firsthand that starting a business can feel like you’re putting out one fire after the next. No matter how many companies you’ve worked at before, how many advanced degrees you hold, or how much industry experience you’ve amassed, you will make startup mistakes.
Some of these mistakes will be frustrating, but you’ll bounce back. Theres always a learning curve associated with attempting something new. But what if you could avoid making the same mistakes that sink most startups?
Admittedly, it is challenging to identify actions cause failure – and learn how to avoid them. Selecting the wrong co-founder, for example, is cited as a common problem entrepreneurs face. The relationship you have with your business partner and the skills they bring can set the tone for success or failure. All too often, entrepreneurs lack sufficient self-awareness regarding their own strengths and weaknesses. As a result, they don’t choose a co-founder with complementary skills.
I’ve worked in my fair share of entrepreneurial environments over the years. I have certainly made mistakes along the way. However, from personal experience, here’s a look at three of the most common mistakes first-time entrepreneurs make.
1. Hiring for cost and not fit
When funds are tight, foregoing top talent can help cut costs. But short-term savings can haunt you down the road. Talented people know their value. Sure, some may be willing to take a small pay cut to join your team, but they’re not going to work for peanuts.
Using cost as the primary driver for hiring decisions is one of the biggest mistakes I made at my startup. Despite being advised against this approach, I went with my (incorrect) instincts to hire unproven and inexperienced employees.
I thought I was being smart by being scrappy. I believed I could train these employees to make up for their lack of experience. I got what I paid for: poor execution, with output lacking in both quality and quantity. A better approach? Hire for fit.
2. Waiting to launch the ‘perfect’ product
Your product will never be perfect. The longer you wait to launch, the more you will start to obsess over details that ultimately won’t matter to the user. Build something quickly, get the early model out, and start testing. Otherwise you risk sinking significant time, energy and financial resources in a product that is not aligned with consumer needs.
When I founded my startup, we acquired a product we could have gone to market with on day one. But my background working at Fortune 500 companies and product teams had conditioned me to a very exacting product standard. Consequently, I resisted launching since the product wasn’t perfect. Instead, I decided to rebuild it from scratch. I wanted to incorporate new technology stacks and deliver a superior user experience.
After months of execution, we were way off of our development timeline and not even remotely close to launching the new version. In the end, we were forced to launch our initial product and saw significant traction within a matter of weeks.
3. Failure to lean on advisors and mentors
Who has your back? A strong support network should. When I founded my startup, I was consumed by day-to-day operations. I knew it was important to build a network of advisors, but I put it off. As a result, I made strategic mistakes that experienced advisors would have caught (and advised against) if only I had taken the time to build my advisory team in the first place.
Becoming a successful entrepreneur takes more than just accepting that you do not know everything. Proactively take steps to surround yourself with the people who can make up for your knowledge gaps. Seek their advice and act on it.
Starting a business is inherently a risky venture. You may not be able to control external factors, like a sudden fluctuation in the market. But there are many factors within your control.
Even if you avoid making the common startup mistakes I discussed above, inevitably other mistakes will occur along the way. Don’t become a statistic. Acknowledge what went wrong, pivot where necessary, and keep moving forward with a new plan.
Rana Gujral is an entrepreneur, CEO, investor and is involved with several startups. Rana was named one of ‘10 Entrepreneurs to follow in 2017‘ by the Huffington Post.