Taking the plunge into the world of entrepreneurship can seem overwhelming, and at times, it is.
Many founders of tech startups are the technical brains behind a revolutionary new product or service that, in some cases, are first-to-market. However, there is often a learning curve to understand the business acumen required to establish a new market or penetrate an existing one; the aspects of finance, operations, sales and hiring are unfamiliar territory.
Fortunately, there are many seasoned entrepreneurs that have gone through the experience first-hand and are willing to advise startups on how to build a success-driven leadership team and establish a brand. Whether or not a new entrepreneur has easy access to such individuals or accelerator and incubator resources, it’s important to prioritize finding a reliable mentor group and partners to help navigate the challenging waters. For those in the process of launching and gaining momentum for a tech startup, here are six common mistakes to avoid.
1. Underestimating capital requirements.
Most entrepreneurs think they can get further with less. In an effort to minimize equity dilution, they forget to factor in unknowns, challenges or delays along the way. Startup leaders tend to plan for the best-case scenario — assuming that the launch of a product will be rapidly followed by an influx of POCs and orders or expecting that a round of funding will close at the originally scheduled time. This mentality can be attributed to leaders’ excited energy and positivity. While positivity has its place, when it comes to balancing the costs of running a business with available capital, founders frequently find themselves having to take the time to go back to the well, often for a less than ideal raise.
2. Relying too much on “silver bullet” ideas or individuals.
Another pitfall of being overly optimistic in expecting a new gun-slinging sales guy or gal to take things to the next level. Or, one might think once a new feature arrives, sales will explode! Unfortunately, “silver bullets” do not exist. Entrepreneurs have to go into starting a company knowing that and turn the focus to building the best team possible. Just like in sports, startup team chemistry cannot be overlooked. Having a group of professionals that excel in their own realms of expertise and can execute business initiatives cohesively and enigmatically is something that can make or break a company of any size.
3. Not investing enough time or money into thought leadership development.
Leaders need to take the time to build their personal brand, not just that of their business. Trust is the most important factor in a sale and if the business’s leaders are credible (demonstrated through quotes in news articles, bylines, awards, etc.), half the battle is already won. Working with a PR professional or agency early on to share compelling, or even controversial, thoughts and ideas about industry trends and breaking news goes a long way in establishing validity of expertise. For those who might be uneasy about the idea of talking to a reporter, whether on the phone, via video chat or in-person, media training is something a PR team can help with. The power of effective thought leadership cannot be overestimated.
4. Using the wrong metrics to judge success.
Tech startup founders should not make the mistake of walking around as if they just built Facebook after closing a Series A funding round. While it’s a great first step, there is still a lot of work to be done. The true measure of a company’s success comes from tactful execution and, eventually, revenue, growth, team chemistry, customer traction and approval, and shareholder relations. When worth is based primarily on capital raised, other aspects of business operations are not given the attention needed to keep the wheels spinning.
5. Drinking your own Kool-Aid.
Entrepreneurs need to stay humble in action and words. It’s far too easy to drink one’s own Kool-Aid and groupthink is a company killer. Surrounding oneself with “yes” folk stifles creativity and keeps business in a comfort-zone. Having independent thinkers on the team with the confidence to speak up is one of the best ways tech startup leaders can stay on their toes. A healthy dose of skepticism will help entrepreneurs always be in the mindset of looking for ways to improve their offerings.
6. Waiting too long to make leadership changes.
Tech startup leaders are notorious for thinking about their next big idea while still seeing through their last. In instances such as this, instincts need to be trusted. If something feels wrong about your team or company, change it! That includes recognizing when it’s time to move on. Startup leaders owe it to stakeholders and stockholders to make whatever changes are in the best interest of the company, even if it means stepping down after taking the company to a certain milestone.
While the journey to launching and growing a tech startup may involve a few speed bumps, there is nothing more exhilarating than seeing an idea come to fruition. Understanding the mistakes of others will help new tech startup founders avoid stumbling over the same obstacles.
Knowledge is power!
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