Startup Death: 8 Mistakes to Avoid from the Very Beginning

Releven
8 min readAug 31, 2022

Startup. We have all heard this trendy word, especially over the last few years, as due to the pandemic and economic crises they have started to go out one by one. There might be a multitude of reasons why startups fail but they all stem from the same deeper cause.

Being a research company, we do love us some research! We have looked into RedAlkemi’s “8 Reasons Why Startups Fail”, and here are the most common ones.

1. Hiring choices might be a two-sided issue

On the one hand, HR specialists lack the resources to hire industry experts that can ensure continuous growth for the startup. On the other hand, their hiring decisions end up being need-based, and the employees put in charge of specific tasks again lack the resources and expertise to do proper research before moving forward.

Let’s say you have a startup and want to do everything right without spending too much money. You hire specialists whose salary expectations are within your budget, hoping that despite their lack of experience they will figure everything out along the way. When they do not, you are too busy with your own big-picture tasks to offer them guidance on smaller but still important steps.

Releven is striving to hire qualified professionals that we trust to make the right decisions. All of our team members understand the importance of research and heavily rely on it when approaching a task. Our company culture’s top principles are mutual aid and self-efficacy.

2. No focus means no prioritizing

Most founders believe that to succeed, they have to build a startup that offers so many services and products that they become unbeatable for the competition. In fact, such a lack of focus only leads to these services and products being poorly thought-out and becoming just one of the low-priority choices for the customers. Research, in such cases, might have helped as it would have provided evidence that niche companies have a stronger chance to thrive.

To put it in layman’s terms, imagine you sell backpacks, stationery, and clothes. You have a competitor who sells just the backpacks. Both of you have the same resources and the same 24 hours. However, you are trying to develop three types of products within your day, and your competitor is focusing on one. It is no surprise that after some time you start to cut out “minor” things from your business routine. First, you decide to advertise just the backpacks this week because of budget constraints. Then you cut back on the fabric for the same reason. Finally, you think that pencils can be put somewhere in the back of the store because of the low demand for them in the summer. All of this eventually piles up, and your products, one by one, start to be outplayed by your competition.

Here at Releven, we understand that it takes time and resources to build up the company’s foundation. We believe that a step-by-step approach is a steady way to growth, which is why we have developed a strategy and a roadmap that we closely follow.

3. A lack of customer service leads to neglect

Being there for the customers always seems like a minor aspect but it is actually not. Customers tend to choose products and services of those companies that they trust and that are transparent about their workflow. Many startups tend to neglect their customers’ queries and give generalized answers to their questions, brushing aside how negative the impact of these actions can be.

Look at this as a customer yourself. You want to purchase a subscription for English classes for your child. You have two options. One school offers lower prices but little support to the customers. Another one has higher prices but an excellent support service that allows you to track your child’s progress and receive recommendations. We bet any caring parent would choose the second school. When you approach the customer service question from the business’ side, nothing should be different. Researching your target audience and their needs will provide you with answers to setting up a perfect support system.

Releven’s mission is to make sure our customers receive full support every step of the way. Moreover, when we complete the research you have requested, we are ready to offer your our perspective on what to do next with consideration of the results.

4. An ineffective business model equals a failed business

Developing a business model is probably the first thing any startup founder does. However, if you do not do research beforehand that allows your strategy to be based on facts and evidence, the whole idea becomes counterproductive. Moreover, your business model has to be adaptable as even with proper research, you can never fully predict what might happen that will influence the market.

Imagine you have decided to expand your product line and start selling sneakers with anime prints. You have been in the sneaker business for some time and supposed that you know your target audience, so you have decided not to do additional research and just marketed your new sneakers to the same customers. Your sales of the new sneakers start dropping, and you just think that they are not wanted by people or are poorly made. Meanwhile, if you have done your research, you would know that this new product requires a specific target audience and a change in the strategy.

Releven believes that pinpointing your target audience and developing an adjustable business strategy greatly improve your chances to succeed as a startup. When you request research from us, we make sure it is as comprehensive as possible.

5. Undesirable products make your startup go sour

Creating a product that will be in demand on the market is a stepping stone that every startup must approach carefully. Considering how fast our reality changes and how many innovations are introduced every day, companies do sometimes come up with products or services that are no longer needed as there are already too many options. Doing in-depth research on your competition can be your solution.

OK, you have thought of a new mobile app that helps with time management and task prioritizing. You believe that it is such an innovation that no one has ever done before or that your app is equipped with so many new features that others do not stand a chance. Except you will be surprised when your app does not do as well as you hoped in terms of purchases. Why? One of the reasons might be that you have created just another option for the market that is already overloaded with similar products.

Releven understands the importance of implementing new products or developing new features in your old ones. We also strive to ensure that you do not waste your time and resources on products and services that might be of little interest to your target audience.

6. Ignoring budget planning might be the death of you

Sure, money is always key in developing any project. If you have lots of it, you might believe you are all set for success. If you lack proper resources, you may say that it is the end of your startup. Although there is more than a grain of truth behind all of this, still, you should be wary of your budget and plan your product promotion accordingly. Researching what you might need to spend money on is crucial for a well-advised budget plan.

So you have $100,000 in investments to get your startup up and running. As any reasonable person, you think that you need to devote the lion’s share of your investment money to marketing and advertising. At the same time, you have not done in-depth research and outlined only your high-priority expenses, not taking into account “minor” things like potential outsourcing expenditures. When you suddenly realize that your designer cannot handle the workload by themselves, and you need to hire more people or request some assistance from outsourcing companies, you have no budget to do it.

Releven stresses the importance of scrupulous budget planning with prior research. Our customers can be certain that we factor in every little detail and possibility when assisting you with your budget planning needs. We want your Releven experience to run as smoothly as possible.

7. Chaotic marketing campaigns are a bad choice

Generally, startups follow one of two campaign strategies – either the safe one or the risky one. The safe strategy is usually low-risk and low-value, but at least it is reliable enough to bring some steady results. The risky strategy might be the try-everything approach. Some companies are wannabe innovators who think that if they test out everything, they are bound to come across something that actually works. However, that usually does not happen at all, and they end up going bankrupt. If these startups did their research, they would know that chaos never does anyone any good, and the campaign that will succeed has to be unpredictable but steady, tailored to the specific needs but adaptable, which is hard to achieve.

To put it simply, say you are developing a marketing campaign for your new cologne. You want it to be the most successful one yet but you do not consider the right audience to market it to or the right place and time to do it wisely. Again, you end up with a perfectly fine cologne that lacks demand and does not bring you any revenue.

Releven knows marketing campaign strategies inside and out, and we are ready to find an ideal match for your company or product. Our broad-based research allows us to make sure that your campaigns go without a hitch.

8. Team spirit is a big deal

When hiring people, HR managers usually pay the most attention to the candidates’ hard skills. Nevertheless, if you want your startup to grow and run smoothly, your employees’ soft skills also have to be on point. If your employees do not know how to work together or they do not want to, striving to assert their dominance and not being able to actively listen and respond, your company might be in trouble sooner than you think.

You have a couple of departments but their workflows are still a work in progress. Your designer and your SMM manager do not listen to each other, and each just pushes their ideas forward and refuses to cooperate. In the end, you have a design that does not match the content’s mood or style and vice versa. Even though both are great in their own way, they do not work together, and your company’s social media account ends up looking out-of-touch and unprofessional.

Releven treats teamwork as one of the essentials for the company’s overall growth. We can help you with research on the methodology that suits your team best and makes their collaborative efforts stand out even more.

You might have noticed that research (or rather the lack of it) plays a key role in all these reasons. If you do not put in the effort or do the groundwork, all the next stages will go unnoticed by your customers, no matter how much money you pour into them.

Releven can prevent that and ease your team’s suffering. We are here for any of your research needs and wants. To discuss them, contact us on releven.io.

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