A comprehensive overview of typical pitfalls and strategies to prevent them.
In Part 1 of this three-part article, we looked at the aspects of Marketing Research, Value Propositions, and Financial Planning as those overlooked by startup companies. In part 2, we will look at Neglecting Scalability, Failure to Adapt, and Disregarding Marketing and Branding as common errors made by startups and what steps can be taken to avoid them.
4.Neglecting Scalability
A crucial factor that determines success of a startup venture is scalability, which involves achieving startup success through growth and expansion of its operations, team, and revenue without increasing costs or complexity.
Many startup ventures fail because they neglect, ignore, or lack the proper frameworks and guidance to achieve scalability, focusing only on the short-term or the present. They either launch a product or service that is not scalable, meaning that it does not have the ability to cope with the growth of customers or users, or they do not have a scalable business model, meaning that they cannot increase their revenue or profit without increasing their costs or resources.
Although neglecting scalability is one of many common small business mistakes, it can be mitigated by designing and developing a scalable product or service from the start, using technologies and architectures that can support high volumes of data, traffic, and transactions. Founders should also evaluate and optimise their product or service for scalability, using tools and methods such as load testing, performance monitoring, and cloud computing, depending on the nature of their product. Startups should also adopt a scalable business model, such as subscription, freemium, or marketplace, which can generate recurring or diversified revenue streams without increasing its costs or resources.
5.Failing to Adapt and Iterate
Another key business lesson to incorporate into starting a new business is the processes of adaptation and iteration, which help founders validate their assumptions, assess their hypotheses, measure their outcomes, and optimise their performance.
Startups often fail to adapt and iterate, sticking to their original plan or vision without considering the feedback or data from the market or customers. They either launch a product or service that is not validated, meaning that it is based on unproven assumptions or guesses, or they do not iterate on their product or service, meaning that they do not make any changes or improvements based on the lessons learned while conducing early business processes, including the usage of feedback or data from the customers or users.
To avoid the mistake of not adapting and iterating, it is best if a startup adopts a lean and agile approach to its startup development, using frameworks and methodologies such as lean startup, design thinking, or scrum. Each type of framework and methodology has its pros and cons, and it is up to founders to decide which to use. Founders should also follow the build-measure-learn cycle, which involves building a Minimum Viable Product (MVP), measuring its results and feedback, and learning valuable startup lessons from them to make informed decisions. Founders should also embrace experimentation and innovation, trying out innovative ideas, features, or strategies, and learning from their failures as well as their successes.
6.Disregarding Marketing and Branding
Another vital aspect of starting a new business is marketing and branding, which help a startup company increase its visibility, awareness, and credibility in the market, and generate leads, conversions, and loyalty among its customers.
Many startups fail because they disregard or undervalue marketing and branding, assuming that they can rely on their product quality, word-of-mouth, or organic growth. They either do not use lessons learned to formulate a marketing strategy, plan, or budget, or they do not execute it effectively. They also do not have a clear brand identity, voice, or message, or they do not convey it consistently across all their channels and touchpoints.
A good example of disregarding marketing and branding is Jawbone. A once-prominent consumer electronics company, Jawbone faltered due to a failure in effectively marketing their innovative products. Despite offering cutting-edge wearables, including fitness trackers and Bluetooth devices, the company’s marketing efforts proved insufficient and lacked the resonance needed to compete with rivals such as Fitbit. The most important business lesson from this failed venture is that inadequate communication of their product benefits led to a diminishing market presence, hampering customer adoption. Ultimately, Jawbone’s downfall – they ceased operations in 2017 – was marked by an inability to establish a compelling brand image and engage customers effectively, contributing to its decline in the fiercely competitive consumer tech landscape.
To avoid mistakes in marketing and branding, founders should create and implement a marketing strategy for their startup, including defining their target market, segmentation, positioning, and differentiation. It is paramount that they do their research on each of these and adhere to best practices in various marketing channels and tactics to reach and engage their audience, such as social media, content marketing, email marketing, Search Engine Optimisation (SEO), Search Engine Marketing (SEM), etc. Startups should also create and maintain a strong brand identity for their products, including choosing a name, logo, colour scheme, tone of voice, and brand story. Startups should also communicate their brand identity clearly and consistently across all their channels and touchpoints, such as their website, social media, email marketing, etc. It is advisable that startup founders research other startups – successful or otherwise – to inform their marketing strategy and business strategy overall.
In Part 3:
In part 3 of this article, we will look at Not Building the Right Team and Not Becoming a member of Equity Match as things that can hinder the performance of a startup.