Preventing some crucial mistakes is essential to boost your startup performance. Here are 3 solutions to solve the most common startup problems/obstacles.
Validating your product
One of the main reasons why startups fail, is the lack of market need for their product. What often happens is that when startup founders do their market research, they fail to validate their product. The first thing you will need to ask yourself during your market research is, “what type of problem am I going to solve with my product?’.
In order to answer this question, you could use quadrants where one axis represents how difficult the problem is to solve. Meanwhile, the other axis stands for how much impact the problem has on society. You could start off by creating a service or product that solves an easy problem with a high impact on society. As a result, the development and implementation of the product or service will cost you the least amount of effort and time.
Moreover, don’t forget to validate your product-market needs in real life! You might want to talk with a few potential customers to know what they think about your product. Consider that people tend to give socially acceptable answers sometimes, so your results might be biased, but don’t worry, there are more creative ways to avoid this problem. A great example is the validation of Buffer.
Act strategically (only make essential expenses)
The second most common problem is that startups run out of cash. What often occurs is that startups don’t act strategically early enough. The first strategy that you could apply is to go lean. In other words, try to keep your expenses low whenever you can, and ask yourself, “Is this an essential expense?” “Are there any other cheaper alternatives?”. The same argument holds for raising funds; are there other alternatives to an investor? The answer is yes, and you should definitely consider them! For instance, start working with a co-founder or CTO and give them shares. Find someone who can do the task and help you run the business at the same time. Keep in mind that the earlier the stage you are in, the harder it becomes to raise funds.
Build the right team
Finally, having the right team is another essential aspect that you should consider.
You might be wondering how you can ensure you have the right team? Well, here are 2 approaches you can use. Firstly, from a legal and practical perspective, you could create an equity plan, also known as vesting period. This method implies that you give out a portion of your company’s shares to the person you will work with. For instance, you will give out 20% of your company’s shares to your co-founder after 2 years, depending on the company’s size. You might also apply a cliff period so that after a shorter period, for instance, 1 year, your co-founder will receive a portion of the equity. This method serves as a safety mechanism to not lose all of your shares if you and your co-founder are not a match. From the HR perspective, you could do all the assessment with the potential person you will hire during the interview, to ensure that each person of your team has the right functions. For instance, you might want to look for a CFO and CTO sensitive to risk, a salesperson, and someone with experience in business development. Moreover, you should build a team where different expectations and levels of commitment are clear because otherwise, you will have a dysfunctional team.
Overall, preventing the failure of your startup is possible, but at the same time, it might be challenging to do everything on your own. Mentors are there to help you! They can help you prevent mistakes that sometimes are difficult to recognize and that may cause a substantial negative impact on your startup’ performance. Containing these mistakes is essential for faster growth. Approaching the right mentors can help you speed up your timeline from 4 to just 1 or 2 years. A mentor can help you find public and private partners, new talents and investors that are willing to work with you.
Author: Mariame Sidibe
International Business & Marketing Intern @ Zero to One
This article was written based of an interview with our founder: Derren de Jong