Mistakes to avoid when starting a start-up

In the article “How to create a start-up company in Italy?” we have seen how innovative ideas, passion and tenacity, alone, are not enough for your start-up to have what it takes to establish itself on the market with authority.

Only with an effective business strategy, long-term financial sustainability and expert consultants at their side, can an entrepreneur start their own start-up with greater certainty of success.

Starting a start-up: the 5 mistakes to avoid

After talking about the actions to be taken when creating a start-up, it is equally important to highlight the mistakes not to commit, if you want to develop your project quickly.

Among the many mistakes often committed by entrepreneurs, we have chosen five:

1. Improvise.
2. Choose a team that is not up to par.
3. Develop a product/service not “validated” by the market.
4. Don’t question yourself.
5. Don’t turn around/persevere.

1) Improvise

Every experienced entrepreneur knows that a brilliant idea, without a solid business strategy, will have little chance of establishing itself on the market.

A choice of team members or funding, without a logical criterion, leads to rapid failure, despite the innovativeness of the project. The same is also true for the choice of product/service development methods, in every phase of the start-up’s growth.

Trusting instinct can sometimes lead to success, but navigating on sight leads the start-up towards certain failure.

For this reason, the preparation of a business plan that clarifies the methods of sustainable development of the product/service, describes the reference market and indicates the resources necessary to reach the pre-established target, is fundamental in the initial phase of each start-up.

This document will have to be modified and renewed several times over time, but it will always represent the reference point to shape future business strategies.

2) Choose a team that is not up to par

At the basis of the success of every start-up that has revolutionized the market there has always been a team made up of qualified people, with common characteristics (passion, flexibility, spirit of sacrifice and resilience) and well-defined roles within the company.

Everyone is able to contribute to the growth of the start-up, putting their ideas and the quality of their work into play, following a program established by the managers and adapting quickly to the changes adopted in the various stages of development.

On the contrary, one of the causes of failure is often the absence of people with the characteristics indicated above or, worse, the presence of subjects with opposite characteristics.

Success passes (above all) from the choice of suitable people to implement the established project, in every sector of the company:

1. founders and stakeholders who share the same objectives and are willing to invest economic resources, time and skills in the start-up;
2. employees and specialized external professionals, who marry the work philosophy and ethics of the company.
3. Well-defined roles and a clear and understandable project for each team of the start-up.

3) Develop a product / service not “validated” by the market

Eric Ries, in his best-seller “the lean start-up“, warns start-ups that spend months developing a product/service with the aim of making it perfect before launch on the market, only to discover that the results they do not live up to expectations.

Before being launched on the market, each product/service must necessarily go through various “validation” phases, which test its actual correspondence with consumer requests and, consequently, with the business strategy of the start-up.

A product/service that is based on an innovative idea, but that does not meet the real needs of the consumer (or that does not take into account his feedback), risks wasting the start-up’s time and resources and being set aside. ahead of time by managers.

4) Don’t question yourself

Continuing the discussion started in the previous paragraph, it should be added that even the most efficient and innovative start-up risks being dazzled by the extraordinary results achieved following the launch of its product/service on the market (the so-called vanity indicators) and not lending due importance to other data, which instead push towards an immediate change of course.

For example, if a start-up focuses on the number of customers acquired each month (and the resulting profits obtained), but loses sight of the ROI (return on investment) for each project it is carrying out, it is not growing sustainably and risks facing failure.

For this reason, every manager must always analyze the data as a whole and constantly question his own working methodology. Especially if he heads the team of an innovative start-up.

5) Don’t turn around/persevere

If the data is not in line with the business strategy, does the start-up have to turn around – putting the project aside – or persevere in product/service development, making only a few changes?

Certainly some very important indicators that allow you to make this decision are the liquidity and the time that each start-up has to persevere in product development. If these are in short supply, the company must turn around, or it will face an announced failure.

Surely, putting aside a project on which the team(s) has/have invested time, money and passion is perhaps the most difficult step, because failure is never willingly accepted.

However, many start-ups have achieved success precisely thanks to the decision to turn around and focus on the development of other projects or, simply, radically change the strategy followed up to that moment for the development of the same product/service.

The importance of a business advisor

Starting a start-up and launching an innovative product / service on the market involves a greater business risk than any other business reality.

For this reason, the errors described above, especially in the initial phase, risk compromising the growth of the start-up and lead the members to abandon the project.

Our advice, especially in the early stages, is to rely on serious, qualified professionals with proven experience in consulting to innovative start-ups and SMEs, since the costs incurred will almost certainly be lower than those that will derive from a ‘wrong strategy prepared autonomously, without any external support.

Our Firm, thanks to the expertise and experience in consulting and assistance to start-ups, both in the legal, commercial and corporate fields:

• provides all entrepreneurs interested in creating their own start-up or defining an optimal business strategy, advice and specific assistance in bureaucratic and commercial practices;
• assists its clients in the market analysis phase, in the preparation of the business plan and in the search for the economic resources necessary to finance the start-up;
• supports the company at every stage of development, advising the best commercial and legal strategies to be implemented and the mistakes to avoid.

Contact us immediately at the numbers +39 0683521985 or +39 3711453121, or write to us at info@studiolegalecoscia.it for specific advice.

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