Where investors have to pick that small percentage of ‘winners’ from a huge range of opportunities, early-stage startups have a much simpler task: don’t let your own project fail!
But how can you avoid failure as a founder?
Obviously, avoiding failure is easier said than done – otherwise everyone would succeed! Most startups do fail, that’s an unfortunate fact of the game. That said, there is a recipe for success…or at least not-failing. It’s just not a very easy recipe to follow! Get one ingredient wrong and you may be on the road to disaster. But still, having a roadmap is much better than guesswork, right?
Based on the Deals Monitor, we’ve seen almost unprecedented investor excitement and plenty of success stories amid a host of new opportunities. At the same time, startups in the early phases are having a tougher time than usual. More on that here.
The European Investor Sentiment Index also confirms these trends!
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“The overall improvement in investor confidence compared to the previous quarter, might be misleading in this regard and investors need to be conscious. Deal sizes increased, valuations increased and competition for the best deals is higher than ever. On the flip side, many startups outside of Berlin and London face hard times when raising funds for a Series A.” – says Berthold Baurek-Karlic, CEO of Venionaire.
To sum up the current situation, it’s fair to say that early-stage founders need to work harder than ever to ensure success. Or, avoid failure if you will.
In this article, you can find the checklist founders need to keep in mind day and night! This is useful for all startups, of course, but is most critical in the precarious early stages.
Why do startups fail?
According to a Failory survey, the seven most common reasons why startups don’t make it – in descending order – are as follows.
You’ll find a dozen variations on this list around the internet, so we’ll leave the details and rather consider how to turn the top three points here into a more positive to-do list for early-stage startup founders.
Success Essentials for Early-Stage Startup Founder?
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Be honest about the market’s need for your product
It’s no surprise that startups stumble on this step more than any other. That’s because your product is the essence of your creative idea. It’s your precious lightbulb moment. You care for it almost like you would for a child. Falling in love with your idea is natural and even necessary to bring it to reality – but the trick is not to let the love blind you.
Positive feedback from friends and family can almost be ignored, as these groups are biased in your favour. Instead, listen to the market and treasure feedback from neutral parties.
Go out of your way to look for the validity in even minor objections and suggestions, rather than automatically dismissing them.
Above all, don’t bury your head in the sand if you can see real doubts forming. They don’t necessarily mean the dream on which you’ve already worked so hard is dead – you may simply need to think about a pivot.
Focused marketing
Marketing problems can take many forms, and are often closely related to product-market fit. That’s why you need to get the first point on this list right before you can expect to nail your marketing! But even when that’s done, you should define a real focus to your marketing – don’t try to do everything.
As an early-stage startup, you are probably a tiny team, and there is always another little marketing thing you could do. Trying to create content for your blog, every social media channel, advertize online, run events and build a complex multi-media website is a full-time job for a team of more than one.
It’s better to choose the channels and media where your defined market is most likely to be, and focus on quality rather than quantity.
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Hire only when there is a good reason to do so
Staff wages are the biggest cost for most companies, and any hire will drain your bank account dangerously fast. Furthermore, bringing the wrong person onto your team can cause significant imbalances and problems when that team is still very small.
Hire when it’s justified by all means, but don’t do it just for prestige or in cases where it’s not likely to bring you a return on investment in the early months when cashflow is critical.
And again, it has to be the right candidate to be worth doing! Don’t forget that you’re probably a complete rookie when it comes to recruitment, so be extra-cautious.
Keep in mind that hiring is not the only way to deal with your growing workload – you can also look at ways to reduce the workload itself.
See the point on marketing above!
Conclusion
Honesty with yourself and clear, calm thinking are your best friends when it comes to following these three important principles for startup success. If you can find a few good mentors, even better. These are experienced businesspeople who have no emotional connection to your project – their opinions probably count for more than that of your co-founders!
For a good chance to connect with good mentors and business angels (often the same thing!), register your startup with the European Super Angels Club.