6 mistakes you should avoid as a start-up
Running a start up you’ll make loads of mistakes and there’s no way of getting away from that. The good news is that failure can help you learn faster. By making mistakes you’re obviously trying new things and hopefully learning valuable lessons.
However, there are some simple mistakes that you should look to avoid. Let’s call it ‘clearing the decks’ for mistakes that are worthwhile making.
- You’re targeting everybody with your product or service.
A classic mistake I see time and again in pitches. Be careful with trying to market your product and secure take up from everyone on the planet. Whilst business customers have more disposable income they might not be the best as early adopters in flocking to your offering. Research carefully who you are targeting. By identifying your customer challenge you’ll no doubt be able to identify your target ‘sweet spot’. Speak to your audience and validate your assumptions. If you want, you can show investors how your audience might grow and adopt new segments over time but it’s best to show you have something compelling for a smaller audience that will care and take up your idea with relish.
2. You are using a freemium model as a way of encouraging sign-ups but have plans to charge later.
There’s nothing explicitly wrong with this. Many start-ups have done it but it’s worth considering the risks you will face when you try to turn that freemium model into a paid one. Many start-ups that offer a free product or service find themselves enjoying significant traction only for that same community to slowly die once a charging mechanic is put in play.
3. You want to only offer support via forums and limited hours e-mail.
This is another classic. In order to keep overheads low you want to use forums and email as the main channels for your customers to get help and support. This often works if the product or service is easy to use and has a limited number of support use cases.
However, if your service is in any way more nuanced then consider investing properly in customer service and support. There are many start-ups that charge a hefty monthly fee (no names given), only for the user to face the nightmare of trying to resolve issues through self-service exploration and ‘ping-pong’ email.
4. You have made a product that is possible but no one cares. You have no users.
Just because you can do something with artificial intelligence doesn’t mean you should. It also doesn’t give you a product or service. Find your customer problem and then design a product or solution to fix it. You need to ask why your product should exist.
When pitching to investors they will want to see evidence of up-take. They won’t necessarily expect millions of users but they will want to be able to see an obvious upward pattern and trend. Any sensible investor will want to see user behavioural data that indicates repeat usage and ultimately your businesses’ power to retain customers.
Also as a side point — be sure to chase users first, investors second. It is amazing how many people are doing it the other way around.
5. You want to create another Airbnb.
The world doesn’t need another Airbnb. In fact there’s plenty of competition already out there. Look for a challenge that no-one else is fixing. The world is full of challenges that require entrepreneurial ideas and endeavour. Try to avoid duplication and replication.
6. You are in it to… sell to Uber.
Nice try but today’s unicorns are professionally run outfits. Creating a business in the hope that it will be bought out by a larger entity isn’t a sensible approach to making your way in life. If you happen to be lucky enough, that’s great but as a means to an end it can spell disaster. At a recent tech event most of the small start-ups had the same vision and often spoke openly about it. It wasn’t about investment or expertise but about selling, cutting and running. Just be mindful that today’s unicorns have large procurement teams and employ acquisition experts who are not susceptible to the latest sexy looking app.
