What not to do while starting up

You have finally decided to take the dive and pursue the idea that has been looming in your mind. Once you write down and conceptualise your idea, you share the idea with your friends and family. Their encouraging words boosts your confidence to get things into motion. Starting up a business is one of the bravest things one can do. Being brave and taking risks are some of the first things that you have to do when you start up.

Often the newly acquired courage and confidence clouds your mind from taking rational decisions. Even the smartest and the most analytical of us can make mistakes. And, you will make mistakes along the way. This means you are really trying to make things work and is a natural part of the process. But, even small errors at this stage can become costly.

Most entrepreneurs start up with a lot of confidence, they think their idea is a gold winner, know who to partner with and most importantly have the financial plan to tide over the initial bootstrap phase. Entrepreneurs also make a lot of assumptions and some of these assumptions are only validated as they progress. And it’s only how well the assumptions come through defines how well your startup performs.

Fortunately, we are able to look at the experiences of entrepreneurs and how they have navigated past the obscure paths of starting up. As we look into the list of mistakes, there is a clear pattern and recurring number of mistakes while starting up. Let’s look at some of the common ones that I have seen myself and few that my fellow entrepreneurs in my circle make.

1. Not validating the idea enough

Most of your ideas are assumptions. Unless you test the market or do a bit of research, it’s difficult to validate your startup idea. Ask yourself the ‘Why’ questions to get the subconscious side of things into the picture.

Now, it’s time to define your idea by listing out some of the core product concepts such as -

a) Who your customer is?

b) What problems will you solve?

c) How does your product solve these problems?

d) The key features of the product.

Customer validation is the best form of confirmation that you can do before you start. Back in 2013, I had the idea of starting an app based bike rental company. The idea came to my mind during a vacation in Goa where bike rental was huge and it made perfect sense to introduce an app based system to a big city like Bengaluru. There was hardly anyone in the space back then and I went to get some feedback from college students and working professionals. I did a quick survey to check if they would make use of such a service, what price would they be happy to pay and so forth. I got a warm response and most of them said it would make their lives easier if the price was right.

Though there were other market dynamics such as unavailability of vehicle insurance during that particular time which halted my endeavor. The whole process of talking to my potential customers gave me the confidence and cleared a lot of questions.

In another case, a friend of mine wanted to build a solution around the driving behaviour analytics of bus drivers. He was confident that a great technical solution could be built, and there was a clear problem around the driving behaviours of bus drivers in the city. However, after just a couple of meetings with a leading bus operator, he found out that the operators were already running on a razor thin margin. Even though, they understood the need for the technology, their lack of budget meant they could not take up the cost for such a system. He quickly realised that the acceptance of his solution would be a challenge and had to drop the idea.

2. Unbalanced core team

One of the reasons, we as humans beat other species in the evolution race is because we were able to leverage new and unfamiliar skills possessed by strangers.

Your core team will decide the culture of your startup. You need to find a team that can compliment and synergise your skills and efforts. There are various reasons why we need partners in a startup. Leveraging skills, support, contacts, finance, IIT/IIM tags are some of the common reasons why people partner. The core team must be able to endure ups and downs of the inception process. They must have the passion, excitement and the know how to get things into motion.

When I first started out in the startup space, I partnered with a colleague of mine from a similar business background as mine. We were good at the management side of things, solving problems and presenting solutions to our clients. However, we lacked the niche core skills in the technology and marketing side of things.

If we had partnered with someone from the tech background, we would have been able to overcome a lot of issues. One big mistake I made was to assume that hiring a service provider to build the product was an economic way of starting up. This was a huge mistake if your core is technology. You need to have a core team of techies or fall at the mercy of your service provider.

There are multiple cases of startups struggling to build product or not having the right people to market the product. At each stage, we need a set of skills and people who would help us get to the next level. It is essential for startup founders to have those skills or to rope in people to the team who would help the business at each stage of the journey.

More than anything, it is essential to have people with the right attitude in the core team. A lot of startups are forced to close because a core person managing the tech or the marketing side leaves for other endeavors. This is quite common in a startup environment because they find the volatile nature of the business and it’s quite natural for people to back off during the first signs of tough times.

3. Building too long

I am yet to come across a founder who is okay to launch a product which is semi-baked or has inherent issues. A lot of us go in with the mindset that product development is a one time activity and hence launching a product that is feature packed would be the right way to approach the market. This is a trap, and you might find yourself in an endless development cycle which will drain you of valuable time, energy, market timing and opportunity windows.

This is why most startups fail because they fall into a trap of perfecting the product. You have to look at it as a step by step incremental process. I have seen many founders feature creeping their products without testing the existing product with the early adopters. This can be a bad and costly process, especially for tech founders who find adding features easier because tech development is their forte.

I would highly recommend you to release your core idea and build a market around it. Get your early adopters and slowly build your customer base and research the market along the way. Don’t waste time trying to re-invent the wheel.

We all have read how Google founders just wanted to make a website to rate other websites. Hence, their landing page was just limited to a search bar and still remains the same to this day. A laser sharp focus on the initial handful of functionalities and features are the most important pieces of the puzzle you need to solve when you startup. Once you understand the market and get some data in, look for avenues of growth and make sure you get the timings right. Before you push your product, look at the market situation and test it out to see if there is a demand. Launching early or late can both impact your product.

4. Spending too fast

Some say success in a startup is all about survival, and capital its the most essential element to survive. The saying “A penny saved is a penny earned.” will hold good for you and your startup in the early stages. You probably will see delays in monthly paychecks as you try to keep your business afloat. If you come from a high paying job, it’s time to start inculcating the habit of cutting corners and saving at each opportunity.

A mistake that all eager founders do is to initiate the company incorporation process. Setting up the company is the dream for any entrepreneur and many hurry to get this in place before they do anything else. Some tech founders can’t wait to start coding and getting up their AWS servers set up, buying domain names and creating social networks. I have seen people get stuck when selecting domain names and shred money to secure the exclusive domain which they think can make or break the business. I would highly suggest analysing your costs and delaying certain expenses. If product development is all you are going to be doing for the first few months, try to delay the company formation paper works until you are really required to do it.

Big corporations hire agencies to take care of things such as designing creatives, running ad campaigns, marketing and other promotional tasks. These agencies usually charge you an arm and a leg for their services. You should also realise that you are no longer working for such a corporation and any money that is spent will be from your initial capital which is usually from your savings. When I first started out, we hired a creative agency to design our branding elements. We tried to justify the outrageous costs with the assumption that branding would give us a lot of leverage with our customer segment.

The brand agency did a great job, but it was something that we could have avoided or could have been done for a lower cost. You still need agencies to handle a few aspects of your startup, but make sure you get the basics done as economically as possible. Some agencies work for part equity, part cash and it’s a great wat to collaborate with them if the fit is right.

The last thing you want is a burnout. Avoid premature scaling without adequate data and market testing. I would advise you to avoid the fast and furious method when it comes to scaling your business. Always remember, the early adopters are your bloodline. It’s all about your early customers when you start up. If you are scaling before you are ready, you’re putting your business at risk. Your ultimate goal is to build something of value to your customers, fulfilling their needs and wants which ultimately builds a sustainable model for you to scale.

5. Not failing soon

Failing doesn’t mean giving up. Failing means you realising and accepting the things you have been doing so far haven’t produced the results. I have seen myself and few others often sticking to a predetermined path for far too long even after getting red signals from the market. Ability to be ruthless with previous decisions can help a founder get on the right path quickly.

This is paramount if you want to keep going. This gives you an opportunity to pivot early. Pivoting allows you to change direction if you have enough data and insights to back it up. Always keep in mind that the early you pivot, the better for your business.

Pivoting a 3 person startup is easier than pivoting a 50 member startup. Make sure you take your time to grow. It is always better to grow strong before you grow up.

My SaaS based product was targeted to architects in the construction market segment. However, we found that architects were probably not the best suited for a new product in the space even though they were more digitally savvy and white collars of their industry. On the other hand, our product was best suited for the contractor segment and best suited their needs. We decided to keep our feet in both boats, because we already had a handful customers in the architect segment. As it was our first ever tool, we had an attachment to it and could not kill it too soon. As a startup, we have limited bandwidth, and choosing to accept a failed decision and shred the baggage will free up a lot of energy and also boosts you with the energy for a fresh start.

Shredding baggage does not limit itself to decisions on the product or market segment, it sometimes can mean letting go of a team member who you find may not be suited for your business. As a bootstrapped startup, you might not be the most lucrative employer, and sometimes you might need to hire smart minds with limited experience in technology or the space you operate in. The reason you need such individuals is because they bring with them the energy, the attitude and fit your budget. But down the line, you might realise, they aren’t able to deliver as required. This is why as a founder, you need to hire the right team member.

I was in a similar situation where one of my team members wasn’t able to deliver the expected objectives even after 6 months, and I had to take the painful decision of letting them go. However, letting the person go was a win-win situation for both of us. This enables us to get new talent as well as allowing the person to find a more well suite job opportunity.

Final thoughts

As a startup founder, you will make a lot of mistakes and hopefully learn from them. A startup business will provide you critical life lessons in a really short time. The most rewarding experience for a founder is to create something of value for people. Life in a startup is never boring and founders are usually the most optimistic people you will find out there. Remember, whatever your goal, in the end you are on a path to create value that only you can produce.