7 Mistakes First-Time Founders Make When Starting a Business

Every beginning is difficult, especially for founders! Many founders are enthusiastic about their idea at the beginning. However, they often forget one crucial aspect: a good idea alone is not enough because, to earn money, the business model has to be right.

Making mistakes and growing from them is part of life. Even new company founders do not always make the best decisions at the beginning. But if you know the most common mistakes other founders make, you can effectively avoid them.

1. Start-up founding team is wrongly put together

The founding team is an important success factor when founding a start-up. It is important to find a good balance between specialist backgrounds, character traits, and members’ behavior. However, in practice, one finds that many start-up teams come together with the wrong criteria when setting up a company. That is why many start-ups fail because of management errors that result from an incorrectly assembled start-up team.

These start-up companies are usually set up too homogeneously at the top and may only consist of technology experts or only marketing experts. Therefore, for a successful company formation as a start-up, it is always advisable to have professionally complementary founding team attitudes towards the start-up company.

2. Over-optimism

Belief in oneself is one of the most important qualities a founder’s personality should bring. It drives you to keep going, despite numerous teething problems or a nerve-wracking 60-hour week. However, it is a fine line to walk between a healthy belief in yourself and over-optimism. Founders who turn a blind eye to problems will not be able to run their company successfully in the long term. The only correct and effective solution is usually the advice of outsiders who are able to prepare purely factual analyzes of situations and problems.

3. Do too much yourself

The entrepreneur works for the company, not in the company.  However, many young entrepreneurs make the mistake of doing too many things themselves. This causes stress and slows down progress due to insufficient capacities and specialist knowledge. Therefore, specifically, outsource activities that you do not necessarily have to do yourself.

4. Conflicts

If the founders have not agreed in detail with each other and with their financiers about their goals, strategies, and concrete steps after the foundation, a dispute often quickly arises. The situation can escalate quickly, especially when things are going badly anyway.

At some point, you just yell at each other, and investors want their money back. The pressure is becoming unbearable, and the founders are only concerned with crisis management. Then it’s often just a matter of getting out of it somehow – the start-up dies a quick death.

5. Insufficient commercial knowledge

Not everyone needs a university degree in business administration to start a business. But a lack of business skills is a major cause of business failure. After founding, things can go downhill very quickly if you have no idea about making money, no matter how good your own start-up idea is. Many companies fail because of the incorrect calculation of financial requirements. In most cases, founders underestimate the costs involved. In the absence of experience, they forget some cost items while calculating others completely wrong.

6. Low willingness to compromise

Of course, everything should run as planned in your own company. And we wish everyone that it turns out that way. But the reality is different: young founders have to deviate from the original plan again and again. This is actually not a bad thing. But if you are not used to encountering resistance and bypassing it, you will quickly find that the forces of the market are sometimes stronger than you think – and the success stories of Elon Musk, Steve Jobs, or Jeff Bezos are one on closer inspection Stringing together problems, resistances, and rejections.

7. The transition from founder to manager

 At the beginning of a start-up, different things are required than when the first hurdles have already been overcome, and your own company can look back on a few dozen employees and corresponding sales. In the beginning, a founder still does a lot himself, but over time his role changes so that his main task is to enable others to carry out their tasks. He goes from doer to manager. This also refers to the lower management level and can mean that a person was very suitable at the beginning of a start-up but no longer really fits over time.

Bottom Line

The best mistakes in starting a business are the mistakes you don’t make. For this reason, you should allow yourself enough time before the starting shot to at least roughly plan all your steps and to exchange ideas with other entrepreneurs while networking. In addition to solid basic equipment for entrepreneurial tools, a good dose of caution and help from experts does not hurt.

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