In the last month I have met a lot with startups from Europe (Poland, Ukraine, the UK, Sweden, Spain). Below I gather the recurring problems I have noticed.
I need a programmer to create an MVP
In many cases you don‘t even need to program anything to launch an MVP and verify that clients want to pay for your services and whether they will use them. There’s no point in holding back with the idea to seek a technical co-founder. You won’t find any investors having only the idea as well. Use a blogging platform and launch a website with an offer, serve customers by email and phone or other readymade tool. Even 10 paying customers will make your idea worth more than the most beautiful excel calculations in the eyes of investors.
Asking friends for advice
Friends usually want to be nice and polite. They will praise your idea and will want to help you expand it. As a result, instead of getting to work you will create increasingly complex product in your mind. Stop! Return to step 1 and find a client.
Selling on the best-known market
Many founders focus on a great product instead of thinking who can pay for it the most. Therefore, they sell it at their local market, to the people they know. It’s often enough to make even a basic analysis to understand that this is not the optimal choice. You should always consider where you would get paid the most for your services and compare it with the possibility entering that market. Of course, sometimes it is fun to attack a smaller, poorer market, but when you create your company and fight for survival, high efficiency of your business will allow you to invest in its development.
Granting shares to key employees too soon
Founders in the first phase of business development often experience fear connected with important people leaving their company. Giving them shares is in my opinion a very bad idea. The company will still change and don‘t know whether these people will still be crucial next year. When they have the shares they a) will stay in the company although they are not the optimal choice or b) will leave with shares, which is probably even worse. Employees are often motivated by completely different things than founders, you shouldn’t assess them in the same way in this respect. However, you can create a bonus system and pay bonuses after reaching a specific purpose (e.g. the threshold of profitability).
Selling too cheap
It’s a very common problem of young companies. An entrepreneur assumes that if they get a 30% margin on the product, it’s great. If you want to grow, you’ll be doing a lot of things for the first time and you‘ll make some errors. High margin is a safety net that will save you in the biggest failures. What’s more – I know many cases where raising prices increased confidence in the offer and made more customers decide to buy.
Remember, however, that all these mistakes are still a drop in the sea of everything you can do wrong! 🙂 Fail often, fail fast!