Startups' founders make many mistakes as they begin their journey of entrepreneurship. These mistakes cost them capital and revenue. They are the reason why 90% of startups fail within the first 5 years in business.

Most of the startups' founders are new to the startups' environment. They were probably working in a big multinational before they decided to take the initiative.

Without realizing that startups operate under a very different set of rules, they are optimistic to start and implement best practices. Most of them fail and end up going back to formal employment.

Startups require a different set of mindset and actions. It is important to know these rules before coming into the world of entrepreneurship.

Common mistakes startups founders make

Here are 10 mistakes startups founders make that lead to nothing but failure.

1. Revenue overestimation on the business plan

Many startups founders write business plans that are not realistic. These business plans have overestimated revenues and underestimated costs. They will say that the business will make money within the first month.

Most of these revenue forecasts are not achievable considering that many founders lack skills and prior business management experience.

It is important to set realistic forecasts. This does not mean you become a pessimist, it means you become a realist. You will make money but not immediately.

2. Becoming a solopreneur

In the business world, there is growth in numbers. This is why businesses founded by several complementing individuals have a higher success rate than those founded by one person.

Business is about leverage. You need to make use of the expertise your neighbor has by partnering with her. You can also make your spouse your partner. Giving away some shareholding to a complementing cofounder is also an alternative.

Always remember that business is a team sport and not a solo sport. Get people to help you grow your business.

3. Hiring salaries workers immediately

Even though the business is a team sport, hiring salaried workers immediately is a big mistake. These workers will consume much of your capital and you will run out of cash.

You should only hire on-demand. As the business grows, customers are increasing and revenue is coming in, the business might demand an extra worker to help in day to day operations. This is what is called hiring on-demand.

4. Not focusing on sales

This is one of the most common mistakes startups founder makes. Many founders do not focus on growing their sales but on product development.

They sit in their offices all day long doing product research and development. They rarely go out there to meet potential customers. Soon enough, they realize that they have a good product that is not selling.

As an entrepreneur, your primary office is out there where the potential customers are. It is not inside the four walls of your business premises.

Get out and push your product to customers. This way, you will smile to the bank. You can then make product adjustments based on customers’ feedback.

5. Not investing in marketing

Marketing is a crucial business function. However, many entrepreneurs rarely take it seriously in their startup phase.

This is a mistake many startups founders make; they rarely invest in marketing. All they want to do is put up one or two posts on Facebook and Twitter and assume that it is enough. They do not pay to have their message out to their target market.

A business should spend at least 10% of its profits on marketing. This is the bare minimum.

If you make marketing decisions wisely, $10 invested in marketing should bring you at least $100 in revenue.

6. Trusting people too soon

Startups founders have this weakness; they trust people easily. They give them access to business information and key resources. Due to the trust, they even give them high positions in the business or even some shareholding.

Within no time, these people end up betraying them and costing them so much. They now have to reconfigure their business systems, change passwords, get new workers, etc.

They may even lose money. Such people may destroy the business reputation and become a big liability to the business.

Never trust people before they prove to be trustworthy. Avoid giving key business privileges and access to people you rarely know closely. This will save you unnecessary heartbreaks and losses.

7. Being rigid

Many businesses change their business models around 5 times in their first year. These are the businesses that succeed. As you become more market aware, you will know what works and what doesn’t. You need to be flexible to adjust to what is working.

Changing your business model does not mean that you are quitting; it means that you are wise. You cannot be doing what is not working and expect different results.

You need to regularly change your strategies and tactics to suit the new market dynamics. However, never change your goal. You may move from one business to another but never quit being in business.

8. Investing in business luxuries upfront

Startups do not need a high-end office or furniture immediately. You should adjust as the business grows.

Unless the luxury is part of your unique selling proposition, start with what you can afford and then upgrade using business profits.

9. Debt financing during the startups' phase

Debt financing during the early stages of any business is not recommended. You need to finance your business through savings and profits. If you have to get debt, get it from your family or friends.

As the business overcomes the obstacles of the startup phase into the growth phase, you can then use debt to finance growth.

10. Not learning

This is one of the worst mistakes startup founders make. Successful small business managers need to learn all the time. They need to learn from books and through experience.

The worst thing a founder can have is a knowledge ego. This happens when the founder thinks that he knows too much to learn. It mostly happens to founders who had high paying jobs. They usually want to bring their experience into a new set up. It does not work.

Do not have a knowledge ego as an entrepreneur. Keep learning. Read a business book every week. This way, you are going to avoid the mistakes other people made.

Conclusion

If you can avoid these startups' mistakes that founders make, you can greatly increase your chances of success. With an average success rate of only 10% among startups, you cannot afford to do what the majority do.

The business world is complex for beginners but becomes significantly easier as you learn along the way. Do not give up.

If you have not started a business yet, this is the right time to do so. If you have a business already, these 10 points will help you scale your business significantly.