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5 Common Pitfalls Startups Encounter and How to Avoid Them!

Home to 21 Unicorns, India is being the 3^rd largest startup ecosystem. The Indian startup has received increased attention in recent years. This simply means that their numbers are on the rise and they are widely being accepted and recognized as an integral part of growth.

Though the immense growth and support for startups that are available in all dimensions is a pleasant change, the cold and hard fact is that most of the startups in India fail within 5 years of their launch, as per a report by IBM Institute for Business Value and Oxford Economics.

There are numerous reasons behind the failure of the startup. But one major reason is due to the lack of innovation. Also, startups that fail tend to repeat the same mistakes that prove costly shortly.

Here is a list of five common pitfalls that every entrepreneur makes at the early stages, but should steer clear of them at any cost:

1. They don`t have a Leadership Team that encourages diversity

Starting our list with the most common but costly mistake that founders usually make is when they begin hiring people for their team. Many entrepreneurs hire people just like themselves. On the surface, this appears to be a sound idea, but the danger lies underneath. Without people who challenge the stereotypes and the founder`s thinking, a startup fails to identify new opportunities or to spot risks until it`s too late.

Avoiding this trap is essential to make a startup business successful. Startups should hire people who think out-of-the-box and know no creative boundaries. The diversity of ideas, skill sets, and backgrounds are the key essentials of every successful startup.

2. They Don`t Invest Time To Find The Right Venture Capital

Capital is essential. But this does not mean that every startup should rush after it. Speed is important, yes, but without breaks, it will result only in a misadventure. Finding a balance speed to find the right fit is equally essential.

Finding perfect Venture Capital is just like finding the right partner for marriage. Take enough time to find the right match- and avoid jumping at the first or the biggest check.

VCs are always on the lookout for the next Uber, Razorpay, Nykaa, or Facebook. To increase their chances, they may invest in multiple companies and come with a growth-at-all-mindset.

To avoid a situation like that put in a considerable amount of time to find a VC partner that will provide thoughtful guidance, mentorship and will be there for you during the challenges.

3. They Create Products Without Considering Customer`s Pain Points

Too often founders get overly enthusiastic about their ideas related to their product or service. They often believe that once they build a product, customers will come. But building a product or a service without any customer validation or A/B testing can be dangerous for a business.

Instead, founders of startups should always find an alpha customer and then create a product to solve the customer`s biggest pain point. Creating a customer-centric product doesn`t happen by just sitting around a conference table brainstorming. The idea to build an amazing product comes from seeking out and tackling the real problems in the world that already exist.

4. They Lack a Clear, Concise & Focused Go-to-Market Plan

More often than not, startups are known to overestimate the demand for their products. Generally, they also lack a clear understanding of how to bring their big ideas to the market. Entrepreneurs should document a clear and concise path to their profitability. To chart this document they should conduct rigorous research and analysis that challenge their market estimates.

This requires an in-depth knowledge of the strengths and weaknesses of their market competitors. Along with that, they should also determine the company`s proprietary advantage in each market segment it is looking to penetrate.

It is also important to be prepared in advance to be able to shift the business with the technological advancement or according to customer needs. And while adaptability is crucial, having a focused plan is also essential. As a startup the resources are generally limited, thus, it is important to be laser-focused for maximum impact.

5. They don`t build Strategic Partnerships

Many startups think about partnerships just in terms of capital and checks. But startups also require strategic alliances that will help them refine their business models, new customers, scale revenues, and generate market awareness.

By making partnerships with large and established companies, startups can save costs on R&D resources as well as the expertise of their professional team.

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Branding: Why it is crucial while scaling your startup business?

Branding plays a crucial role in the success of every business. And when it comes to startups, branding is of paramount importance. It is vital for the development and growth of an organization.

Your brand becomes a part of the customer`s everyday life. For instance, if a customer wants to purchase a product, he or she would like to buy from a company that not only offers great quality products but also provide other assurances. And, if a customer feels that your brand is the best in the market, then a customer will buy it even if it is a bit costlier. This is the impact of having a solid brand image.

A brand is what helps your business distinguish your product from the league and helps consumers associate themselves with your brand.

But many entrepreneurs fail to recognize its importance in the initial stage of the business. They make the mistake of obsessing over their products and turn a blind eye to every aspect of the branding. This can lead to a series of disastrous consequences for the product as well as the company in the long run. Due to the negligence, the brand might become unnoticed and irrelevant.

According to an analysis conducted by the Marketing Accountability Standards Board (MASB), ‘brands contribute on an average of 19.5% and if the impact is measured based on firm cash flow, profits and firm value, the impact could be contributed for over 50% of the enterprise value.

Another report by the Marketing Science Institute (MSI) that included around 220 consumer products found that a superior brand preference or reputation commanded price premiums of 26% on average, even when brand quality is the same.

Brand Image: A living persona

Your brand image is like a living entity. If your brand can create ripples in the market and generate excitement by showcasing life, you can get a loyal clientele. Your brand grows and matures over the years and builds its persona just like a living entity and provides a solid competitive advantage.

In this age of digitalization, it is important to have a unique brand strategy that will engage the audience across multiple mediums. Therefore, it is essential for every company to carefully select and invest when it comes to building a brand that speaks volumes about the company`s unique business strategies and core values.

Branding is essential for business sales too!

If your brand connects straight away with your target customers, it will result in an excellent customer experience. And according to a report published in Forbes, ‘73% of companies with above-average customer experience performs better financially and also get higher revenue’.

Another report suggests that around 17% of the consumers are willing to pay more to purchase from a brand that has a great reputation and market value.

Harvard University professor, Gerald Haltman who is the author of ‘How customers think: Essential insights into the mind of the market’, writes in his book that 95 percent of a customer`s decision-making process happens subconsciously. Hence, the major reason why a customer will choose your brand instead of your competitor will largely depend on how the consumers ‘feel’ about your company.

And why this factor is important for a startup? Startups tend to have major competitors who have a larger team, better infrastructure, brand reputation, and marketing knowledge. A good brand image will help you to attract more customers and your product will finish on top of your competitors.

Brand Image: Honesty v/s Perfection

Startups represent innovation and a distinct approach towards the same product that is already available in the market. It`s their uniqueness that connects them super strongly with their customers. However, too many companies want to represent their brand under a perfect and idealized spotlight. This results in a brand image that lacks the character, texture, and trust of a consumer.

Another blunder that most startups do is copying other businesses or internet trends and images. Creating a fake image of their brand that does not represent them would simply mean wasting the most valuable emotional factor due to which a startup ends up eroding its customer base.

Branding in the internet age

With technological advancements, the internet has slowly taken over. Today, with the advent of affordable smart-phones, branding of products online is no longer a luxury. It has become a necessity for startups where they can sell their products to a wider audience.

With cost-effective internet that is available to most people, a business must use this opportunity. Despite the changing times and mediums of advertisement, branding is still an integral part of advertising and the business world. Hence, listen to what stakeholders and customers have to say about your brand, and use their feedback to make improvements. This will also build a better brand image.

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