It’s human to make mistakes. We all do it. Early-stage entrepreneurs are juggling a lot of balls, so mistakes are bound to happen. The important thing is to not beat yourself up about it and instead invoke the wise adage of Samuel Beckett:
“Ever tried. Ever failed. No matter. Try again. Fail again. Fail better.”
Learning from your mistakes is what will make you successful. And you can even get a head-start by learning from the mistakes of entrepreneurs who have gone before! There are common mistakes that startups make, such as not listening to their customers, not pivoting when they should, or not getting their branding right. Today, though, I’m looking at four key mistakes that entrepreneurs often make running the business itself.
Not having a proper partnership agreement
When times are good and you’re enjoying some success, the thought of drawing up a proper partnership agreement can seem unnecessary. However, growing a business is rarely straightforward. There will be bumps in the road. There will be turmoil. There will be disagreements. None of these detours should deter you from your overall goal too much, but if you have failed to draw up proper contracts with your partner(s) it could be easy to make a mountain out of a molehill.
It is vital to get a partnership contract in writing. Remember, this is not only about protecting yourself but also your partner(s) and the families dependent on the income from your startup. This contract should cover essential information such as the division of ownership, the duties of each partner, the duration of the partnership, what happens in the case of disability or death, how a partner can buy their share and how a partner can be terminated.
Waiting too long to get the next round of funding
Securing your first round of funding is a reason to celebrate. But don’t spend all that money at once! When you see that row of zeros sitting contentedly in your account, it can be tempting to pull out all the stops and get the best of everything: best office, best location, best candidates, best gadgets, and best website! Not only would we suggest not blowing your seed fund, but we’d also recommend you get going on organising the next round of funding at soon as possible.
Securing funding always takes longer than you expect, even though you have now established yourself in the startup space. The worry is that investors who are interested in later-stage funding will be more risk-averse and expect to see more results before they part with their money. This can make attracting the right investor trickier than you might expect. Therefore, the best thing you can do is give yourself as much breathing space as possible and start working on the next stage of funding long before your money has a chance to run out.
Recruiting for technical skills and not soft skills
Having a limited budget will influence the decisions you make in all kinds of areas. Given that salary is one of the biggest costs for any company, it makes sense for a business owner to be judicious in who they recruit. You know what you bring to the table, which makes it easy to see what your startup needs to move forward. Therefore, hiring based on technical skills alone can seem like the wise choice in this early stage.
However, those first hires are going to be instrumental in what kind of company your startup becomes. They will influence the culture, the processes and client relationships. That’s why at this stage it can be a mistake to hire the moody artist or the aloof genius! Look for technical skills but also make sure to hire someone who has those crucial soft skills, such as being conscientious, communicative and trustworthy. It will serve you better in the long run.
Forgetting to delegate (or worse, micromanaging!)
Entrepreneurs wear many hats. They are the doers. The makers. The movers and shakers, as poet Arthur O’Shaunessy called them. The problem with all this doing and making is that entrepreneurs often don’t know when to stop. When you know how everything is done and expect a certain standard, it can be hard to share responsibilities. But if you’ve decided to expand your startup and are in the process of building your team, it would be wise to take some time to reevaluate your role in the company.
Your startup won’t grow if you continue to control everything. Trying to complete every task on your own will not only burn you out but will also stop your team from growing. There will be a trial-and-error period in the beginning so it’s OK to keep the training wheels on for a little while, but eventually you will have to give your team the space to shine. If you’re struggling to get to grips with this new phase of your startup, a great way to gain some clarity is to pull out a pen and paper and create a whole new role for yourself with a specific list of responsibilities.
What mistakes have you made as an entrepreneur? Perhaps you nearly made a big mistake but caught it just in time? We’re always keen to share the insights of our startup entrepreneurs, so if you are a past or present New Frontiers participant and would like to share your story, let us know!