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Learn about the most common fallacies and mistakes businesses make

75% of startups close their doors after two years. Take note and don't make these mistakes.

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This article was translated from our Spanish edition using AI technologies. Errors may exist due to this process. Opinions expressed by Entrepreneur contributors are their own.

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Managing a company or startup is a challenge that many entrepreneurs continue to join, however, this emerging business model can be complicated and, if not managed correctly, it can end up failing.

According to the Institute of Failure, an independent body based in Mexico that is dedicated to analyzing the entrepreneurial ecosystem of a country and studying the reason why these types of initiatives fail, 75% of startups close their doors afterwards. two years .

The motives? The lack of an adequate and realistic business plan, not developing a strong value proposition, not knowing in depth the market to which they are going to target, blurring the goal, are some of the causes that lead a business to stop growing up. For this reason, I invite you to know the most common fallacies or mistakes that businesses make according to different startup founders. Knowing them will help you prevent them and correct them in time to develop your business in a better way.

The most common fallacies or mistakes that businesses make according to startup founders

1. “ Not seeing what the market is demanding ”, Marcelo de la Garza Clariond, Co-Founder of Gesta Labs

There are three recurring errors. One is that they close to the initial idea and do not see what the market is demanding, the second is to delegate the financial issue and run out of capital due to lack of planning, finally, assume a high value of the business without having sales traction.

2. “ Not dimensioning the difficulty of undertaking ”, Luis X Barrios, Founder and General Director of Arkangeles.com

Not assessing the difficulty of entrepreneurship and the resilience that must be had as an entrepreneur to overcome adversity when starting a business and raise it to the next level. Get carried away by the romanticism with the partners and do not establish agreements and expectations from the beginning.

3. “ Covering many markets ”, Alan Miranda, CEO and Co-founder of Digital Lab Agency

Wanting to do everything at once and cover many markets are very common mistakes when undertaking.

4. " Lack of knowledge of access to foreign capital ", Rodrigo Saavedra, CEO of SV Links Angels

Lack of knowledge of access to foreign capital is one reason why companies end up going bankrupt. In many places, especially in developing countries, there is a clear disconnect between venture capital and entrepreneurs. Granting participation in the company in exchange for an amount of money that allows the development of the business is unknown and is an extremely important part of the venture.

5. “ Believe that there is only one unique value proposition ”, Eduardo López Perez, CEO and Founder of Grupo Dúo

Believe that there is only one unique value proposition in the business and focus it only on one product. Also, believing that a product makes a company, using Business Model Canvas as a business management tool and confusing a business model with a revenue model.

6. " Not having constant feedback from customers ", Ivan Lozano, CEO of Talentum

Assume that customers will buy or use something that they don't really need. That is why it is important to have constant feedback from users. Otherwise, only valuable resources such as money, time and effort will be wasted unnecessarily.

7. “ Generate debt ”, María Elsy Abreu, Co-Founder of Cacao Mae

Investing and borrowing ahead of time, that is, generating debt. Another recurring mistake that brings many negative consequences is having poor communication with the team.

8. “ To think that you need a millionaire investment to start ”, Fernando Alanis Espinosa, Founder of SATI

Think that an investment of millions of pesos is needed to start. Also, the fact of looking for the perfect product that works 100% without errors. While they are looking for that they do not sell and a lot of time is wasted. Another recurring mistake is creating the product without first validating it.

9. " Not realizing that without innovation the market becomes finite ", Ricardo Quevedo H., CEO of NeuroClase

Not realizing that markets for companies without innovation are finite. Failures in the mismanagement of resources and finances of the business, not having a good organizational climate, forgetting the human factor and the quality of service, are other common mistakes in business.

10 “ Do not invest in development ”, Nelly Vazquez Jimenez, CEO of Womcy México

Thinking that you have the best product on the market and not investing in development, in customer service, in technology that allows you to offer a pleasant shopping experience to users and in a methodology focused on the sustained growth of the business.

11. “ Not preparing a business plan ”, Javier Alejandro Gómez Sánchez, CEO of Corporativo G2

The first mistake is not to develop a business plan, it is thought that having a good idea, product or service is enough to achieve success. Another mistake is to immediately spend the first profits or profits, you have to keep in mind that you must continue investing, so you must have working capital.

12 “ Seeking a disruption without identifying the solutions that already exist in the market ”, Ruben Ariff Alatorre Bernal, CEO of Alfonso Marina

Looking for a disruption without identifying the solutions in the market that already exist, considering that they invented the black thread and not realizing that other people have already developed that solution and have a significant advantage. Incorporating technologies and processes to solve an unmet market need may be the way.

As you can see, there are several mistakes that are made when developing a business, however, many of them can be prevented and even avoided. Now that you know them, work on and implement practices that help you avoid them and give your business a better direction.