Four Mistakes an Early-Stage Entrepreneur May Commit Post First Round Mistakes can be avoided through proper information and knowledge

By Neeraj Tyagi

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In this competitive era, entrepreneurship is not everyone's cup of tea. Coming up with a new idea and opening up your business is not difficult, but maintaining and scaling up your business is called success what every entrepreneur looks for. You must have heard of several startups and businesses which did incredibly well in the initial years of their business cycles but failed terribly in the following years. This usually happens due to the mistakes an early-stage entrepreneur makes in the initial stages of his business, usually after the first round of funding. Let us discuss such mistakes in detail below:

Bad recruitment process

The recruitment process is one of the most important processes while setting up a business. Therefore, the founder needs to be cautious at the time of recruiting the people. In the bootstrapping stage, the entrepreneur/entrepreneurs do a lot of multi-tasking, but once they complete the first round of funding, they often try to complete the recruitment process in a hurry and at times, make poor choices. They either hire too many employees or hire unnecessary inexperienced people.

On the other hand, some early-stage entrepreneurs do the opposite. They hire a very small team wanting them to multi-task and play multiple job roles to enhance the profit. That leads to suboptimal results and exploitation of employees. The entrepreneurs, especially in their early stages of business should follow an approach where they would hire qualified people in a balanced proportion with the job roles. They should hire only the necessary personnel through a formal recruitment process with defined job roles. Also, never hire just to have extra cushion in the system.

Unhealthy relationship with the investors

Post first round of funding, many entrepreneurs commit the mistake of not maintaining cordial relations with the investors. They ignore the fact that it is necessary to maintain a healthy relationship with them and keep them updated about the progress the business made post-funding. It not only helps in securing future funding but also helps in getting valuable advice or help regarding the scaling up of business. This is because most of the investors are the people who have been through these situations and know what mistakes entrepreneurs tend to make in the initial stages post-funding.

Building a healthy relationship with your investors may seem like a basic activity, but many entrepreneurs lack the knowledge to understand the significance of this activity. Therefore, an entrepreneur must hold monthly meetings with his investors and inform them about the progress being made in the business post-funding. This attitude will give the investors a sense of integrity with your business, and those investors will also prove to be helpful in case of seasoned financial assistance.


Another fundamental mistake that most of the entrepreneurs make post funding is spending rigorously on non-productive things. Whenever they think of the business growth, the first thing that comes into their mind is buying a fancy plush office for their company. Buying an office is necessary, but before that, the development of your product/service is more important. You don't need a large fancy office to get your customers to know about your product.

After the development of the product, the next step should be diligent marketing and sales. The company should not invest recklessly in in-efficient traditional marketing techniques to boost sales but lookout for effective marketing techniques like digital marketing that will serve the same purpose but at a relatively low cost. The type of marketing strategy you follow entirely depends upon your business and your target audience. Hence, an entrepreneur should avoid overspending and instead invest in the development of the product, efficient marketing techniques, general reserve and other verticals.

Lack of focus on accounting practices

Through accounting practices, an entrepreneur gets to know about the financial position and yearly income of his business. Yet, so many early-stage entrepreneurs overlook the importance of maintaining accounts and ignore book-keeping practices, especially after seed funding. The profit of a company can only be derived after knowing all expenses and incomes of a business. Hence, it is crucial for an entrepreneur to maintain his company's proper books of accounts and never forget to enter even the smallest expense or income. Through proper book-keeping, one gets to know about the working capital and cash flow of his business.

When a startup or a small company goes for subsequent rounds of funding, then it needs to go through several formalities. If a company follows all the required accounting practices, then only it can impress the investors to show interest in their business. Nowadays, there are numerous software that help a company in maintaining their books of accounts in a very simplified form which eradicates the need for hiring professional accountants or CA. Moreover, it is unlawful in nature if a company does not maintain proper books of accounts.

Final thoughts

An entrepreneur makes numerous mistakes, especially after seed funding, which at times lead to the closure of business. But, such mistakes can be avoided through proper information and knowledge. Therefore, an early-age entrepreneur must be knowledgeable and well aware of the dimensions of his business, must be economical, a good communicator and a responsible citizen.

Neeraj Tyagi

Co-founder and CEO, We Founder Circle

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