Starting a new business is certainly a rewarding venture. However, it can also be risky. Launching a tech startup can be even more challenging. Entrepreneurs have to build their company from the ground up and some of them may have little to no experience in the business world. Other problems such as handling finances and hiring employees on a limited budget may also arise.
Due to these reasons, a good number of tech startups end up in failure. If you don’t want your startup to become another statistic, here are ten common mistakes you should avoid at all costs:
- Doing it Alone
Establishing a tech company takes hard work and dedication. It is also important to remember that you do not have to do it alone. A majority of successful startups are always a combined effort. There are many highs and lows, therefore, it may be hard to carry on without any motivation or encouragement. Managing a tech startup also comes with plenty of administrative tasks. As such, it may be impossible to market a plan and build the product or offer the service all by yourself. A little help from professionals or consultants will help in launching or propelling the startup.
For examples, companies such as SoloSoft, which is one of the top technology consulting and outsourcing firms in USA in 2017, helps thousands of young startups get their projects off the ground. Hiring the service of a consultant in the earliest stage is essential.
- Skimping on the Business Plan
A solid business plan plays a vital role in determining the future success of your business. It also steers the startup in the right direction by determining the purpose of the company, benchmarks for success and every other aspect of the startup. You do not have to create a formal business plan. However, tech businesses simply need to have a document that will determine the company’s direction over time.
- Forgetting to Look for the Right Funding
External funding is important for a tech startup to achieve success. This is because it will enable the company to finance all of its projects. Investors usually look for companies that have originality and a clear development plan. As such, you should always ensure that your company stays on the right track. If you find a good investor, you will always have reliable funding. However, you should ensure that your idea remains feasible and you have a clear working model with a realistic timeframe. As such, the company will be able to market itself and develop.
- Doing Everything In-House
Granted, keeping every aspect of development in-house is a way to cut costs. However, this is not the right way of introducing your product to the market. Not every startup has the means to hire a full time software developer. Outsourcing software development will ensure that you get the best quality for the lowest price possible. This is not to say that your company does not have any professionals. On the contrary, outsourcing is a way of enabling them to focus on other projects at hand. It will also help the company balance costs as you do not have to hire a full-time employee.
- Thinking Small
Many tech entrepreneurs target a tiny niche market. However, it’s not always safe to target a smaller crowd simply because you believe that the competition will not be as fierce. Small niches often mean small markets with small opportunities.
- Launching at an Unfavorable Time
Timing is everything when launching a startup. While entrepreneurs cannot control everything, they can still find ways to launch at the right time. There is nothing worse than rushing to launch a startup when the company is actually not ready. At the same time, the company should not wait to launch for too long. If you do so, there is a chance that a competitor will be first to market a product.
- Investing Too Much in the Long Term
Investing in the future is not a bad thing, however, if you are pouring funds into developing a single, large product, you should ask yourself it is worth the risk. It is always better to focus on a minimum viable product (MVP) that will be brought to the market quickly and make profit effectively.
- Having Too Much Outside Influence
It does not matter if outsiders are advising or criticizing you, they shouldn’t be the ones running your business. While feedback is always great, too much of it can be dangerous. Many people believe that all feedback is great, especially for a tech startup, but that couldn’t be further from the truth. Being pulled in too many different directions is never good for business.
- Lack of Enough Startup Capital
This does not only apply to tech startups but other types of businesses too. Many startups underestimate operational expenses and do not put any money for emergencies aside. You never know which turn your business could take, therefore, it is always important to have more than enough. Any less than this will slow your business down and could even swallow your personal assets.
- Failing to Keep Cash Flow Records
Recording where your money comes from and how it is spent is important in any business. Without keeping clear records, you will not be able to make feasible business forecasts. Your expenses could get out of hand and this will ultimately create confusion within the startup. Create an accounting system that properly works and allows for the merging of various accounting records. Good management of funds will give you control over your business and its financial future.
When starting any business, it is important to ensure that your entrepreneurial vision and your business ideas are in sync. They should also be practical. If you manage your tech startup well, then it’s bound to be fruitful. Whatever you do, make sure to steer away from the mistakes in this article if you want to start your startup on the right foot.
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