What are the most expensive mistakes that startups make?
Running out of money is the number one reason that startups go broke and shut down. The key to championing this critical part of the business is to know what not to waste money on, and where to invest it instead.
There are many, many small things that the vast majority of startups consistently burn money on necessarily or at least do inefficiently. Those things can add up and eat you alive over time. They can be targeted by regularly evaluating finances, deploying business cost-cutting measures, and iterating. More importantly, there are the big and expensive pitfalls that startups fall into.
A very high percentage of first-time startup founders underestimate the cost of these mistakes. Which is likely why there is such a high startup failure rate. Check out this list to avoid them, and be one of the few success stories, while enjoying the journey even more.
Not Completing Competitor Research Upfront
When thinking about the most expensive mistakes that startups make, keep in mind that financial failure is often a side effect of the big mistake of not completing research upfront.
A surprising amount of startups end up finding there is no market for what they are making and selling, or they overlooked the competition. This will doom you to failure from the start. Even if you end up raising millions via startup fundraising and spending years chasing a losing mirage.
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Some don’t even spend five minutes on Google search to realize their idea has already been done identically by others. Others mistakenly believe they won’t have any competition. That is never true.
If you succeed, then both big established corporations and other new startups will want in on the game and will compete with you. Some with bigger funding and teams. Others will be able to operate more cheaply and faster. You need to establish your sweet spot upfront.
One of the most important metrics is market size. This will determine whether you are fundable by investors and if there is even a big enough opportunity to become a real business. Or at least one that is big enough to deliver on your dreams.
Not Having An Urgent Problem
There are a few frivolous luxury products that appear to have done well and this is something to consider when discussing the most expensive mistakes that startups make. Yet, the best startups with the best odds of success are those who are really tackling an urgent problem which is really painful for their customers.
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