The most successful entrepreneurs generally possess professional goals and personality traits that are distinct from those of company managers. According to data amassed from more than 23 studies, the best entrepreneurs are more likely to demonstrate characteristics such as increased levels of curiosity, an interest in innovation, a high degree of self-discipline, and greater stress tolerance.
Despite these positive traits that help to make them highly adaptable, tenacious, and confident, inexperienced entrepreneurs are prone to making several common mistakes in the early phases of a startup’s growth. In some cases, this causes the new business to fail. Following are four common mistakes that new entrepreneurs should try to avoid in the early phases of a company’s development:
1. Procuring too little (or too much) funding
Although not all startups will leverage fund-raising to get off the ground, those that do must focus on finding a balance between raising too much or too little money. The consequences of insufficient fund-raising are obvious: without enough money, a company is incapable of growth. A company’s runway is only as long as its funds allow it to be, and not securing enough capital will leave even the most promising startup without the support needed to transition from one phase of development to the next.
Surprisingly, startup founders who raise too much money are also taking a potentially damaging risk. Entrepreneurs who accumulate far more funding than they need may face an increased sense of expectation from investors who want to see their money put to work quickly and effectively. This could lead a company to scale up too quickly, and founders may find themselves hiring the wrong people, lacking direction, or losing the innovative spirit that pushed the company forward at the beginning.
2. Partnering with the wrong co-founder
Successful business partnerships often benefit from a sense of chemistry, which is an especially important attribute for relationships between startup co-founders. The fast-paced, high-pressure, and quickly changing nature of the startup world is a complex environment to navigate. The person whom an entrepreneur has by his or her side can either make the business development process easier or much more difficult. Startup leaders should find a co-founder whose skill set balances out his or her own and who shares core business values that will impact the startup’s governance and development.
3. Having too many (or too few) co-founders
As important as it is to choose the right partners when launching a startup, entrepreneurs should be careful not to recruit too many co-founders. While it’s true that a larger leadership team can bring more varied skill sets to your company, it can also make it more difficult to reach a consensus on crucial issues. A startup in which too many people are attempting to call the shots can become inefficient.
The need for a co-founder who suits your professional values and who makes a startup’s leadership structure as uncomplicated as possible may make many entrepreneurs consider founding their startup alone. However, the benefits of having a co-founder may outweigh the drawbacks, as having a partner allows leaders to divide the intense workload that traditionally accompanies a young startup. Additionally, it reduces stress and the likelihood of burnout. Some research even shows that having two founders rather than one can help a startup raise up to 30 percent more funding and triple the size of its customer base.
4. Listening too much (or too little)
Founding a startup requires that leaders have a strong commitment to their vision, as well as the capacity to adapt quickly and make changes when necessary. This trait is especially useful when it comes to considering input from team members. New startup leaders often make the mistake of tweaking elements of their business without first considering whether the change will steer the company toward its goals or lead it off-course. It is important for startup founders to learn how to apply good feedback to a business without changing the overall vision of the company.
Conversely, a leader who does not listen to feedback often enough can prove to be an even greater mistake, especially when it comes to the opinions of customers. Although criticism can be difficult to hear, it is one of the most useful tools that leaders have when creating a better product or service. A failure to seek out customer input or ignore voluntary feedback can be a major obstacle to success. Additionally, the more accommodating that a business is to customer input, the greater loyalty that customers are apt to have toward the company. Company founders who ignore the value of customer loyalty can alienate markets before a business can even approach success.