10 Mistakes Budding Entrepreneurs Must Avoid
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The buzzing startup ecosystem has made entrepreneurship one of the most alluring professions in India. Today, becoming a startup founder is the ultimate career goal for many graduates. However, building a business is no child’s play. It is a tough journey and if not done right it can be an absolute whirlwind.
Entrepreneur India talks to founders and venture capitalists to understand the mistakes that budding entrepreneurs should avoid.
Mistake 1: Giving up soon
Never give up easily is one piece of advice successful founders would like to give budding entrepreneurs. “The startup ecosystem is challenging in which there is a new problem to be solved every day. Resilience needs to be developed in order to sustain through the tough times,” said Saahil Goel, CEO and co-founder, Shiprocket.
According to Goel, one should focus on building a product that is solving a problem and has a good product-market fit. “Keep innovating and iterating your product till you find this. Don't give up!,” he said.
Mistake 2: Frequent hire and fire
An entrepreneur should also not play on extremes when it comes to building a core team. “If you are getting into a frequent hire and fire mode, it's only natural to see some kind of instability in the work. But alternately, hanging on for way too long is also not a very good idea. Because if you do so, you are only bloating your newly started company that will slowly die,” said Kausambi Manjita, co-founder and CEO, Mason.
Founders should learn to balance when it is important to nurture someone compared with when it is time to cull it, especially if they want their company to stick around for a long time.
Mistake 3: Resisting change
If there is one thing that pandemic has taught all of us is that nothing is permanent. “Business survival is paramount even if the product or business plan needs to be changed, for the sake of survival. Many companies leveraged their competencies to build a best in class line of business during this time,” said Padmaja Ruparel, founding partner at IAN Fund and co-founder of Indian Angel Network.
Mistake 4: Thinking “money” rather than “people”
Undoubtedly, entrepreneurs spend the most amount of time upskilling themselves and contributing to the company from day one. However, that doesn’t mean they should own a larger stake in the company. They should rather share equity freely with important people who will help the company grow. “Have open and honest conversations with the team rather than focusing all your thoughts on the profits. After all, 1 per cent of $100 million is way bigger than 100 per cent of $0,” Manjita added.
Mistake 5: Micromanaging people
Micromanaging can have a negative effect on employees. It is considered to be a poor leadership trait. Relegating work to employees and decision-making capabilities to team leaders can go a long way in increasing productivity. As Apple co-founder Steve Jobs said, “It doesn't make sense to hire smart people and then tell them what to do; we hire smart people so they can tell us what to do.”
Mistake 6: Over-planning and striving for perfection
As an entrepreneur, one needs to accept that things will change in the long run. Experienced founders believe that over-planning can sometimes kill your creative buzz. “Don’t try to make your product perfect, it is a never-ending process and one which will take time. Launch a beta version as fast as you can and start getting user feedback. Only feedback can help you to perfect your product,” said Jasveer Singh, co-founder, DotReview.
Mistake 7: Listening to everyone
When you are starting out, there will be many people with a lot of advice. One shouldn’t listen to one and all as that can be disastrous. If one is starting out, he or she should rather surround themselves with subject matter experts and mentors who they can lean on and learn from.
One should, especially, stop taking advice from people who have never started a business, instead should look for professional help to start on the right track.
Mistake 8: Not collaborating with the right investors
Partnering with investors who do not align with your vision can end up in terrible decision-making. “Investors play a key role in the growth of a company and it is essential to join hands with the ones who share the same vision and value beyond just the capital,” said Dr. Sanchit Sharma, founder and MD, Ayouthveda. Additionally, an unrealistic valuation of a company repels investors. “So being realistic and practical is of utmost importance,” he added.
Mistake 9: Being underprepared
If planning too much and waiting for the most perfect product is wrong, being unprepared can wreak havoc on the business outcomes. “Going to market without proof of concept and being underprepared is yet another error that most budding entrepreneurs make,” added Sharma. An idea should be with a proper customer base and market and brand presence, believe experts.
Mistake 10: Misjudging time to raise capital
The right time to raise capital, according to established founders, is when one has a clear idea of the road ahead and clarity on how much money is needed to achieve those goals. It is also important that one has had some milestones that can be shared with angels and VCs. This is important to gain their confidence.