Sep 24, 2020
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Six Common Mistakes To Avoid As A New Entrepreneur

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Photo: GETTY At a time when starting a business can be easier than deciding what you like for breakfast it s easy to get caught up inside the idea of launching your individual startup. The result? Approximately 543 000 new businesses are started each month which is more than 6

 

5 million new businesses per year. And 70% of upstart tech companies fail within their first years of existence. Some however are rather lucky. I launched my first startup — Inbox. lv — in my home country of Latvia back in 1999. Three years later this Latvian corresponding to Hotmail became the rustic s first-ever tech exit

 

This was followed by the launch of Roamer an app that quickly gathered over 1 million users and at last led to an exit. And now Lokalise — a translation management system that’s in its fourth year — has reached $3 million annual recurring revenue. None of these successes have come without mistakes that have taught me invaluable lessons

 

Listed below are six things new entrepreneurs get wrong when starting a business. Having No Clear Idea How The Startup Will Make Money Business refers to an individual or organization that profits from providing goods or services in exchange for money. The core definition of business states that it has to make money

 

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VT Engage Rally The Youth Vote On Campus However many new entrepreneurs are so blinded by their idea and focused on bringing it to life that they lack a clear vision of how their product will make money once it s built

 

As a result way too many products are dropped at life with no clear monetization strategy. These businesses either die after they run out in their existing investment or spend years counting on VC money. Pursuing A Business Idea Without A Product-Market Fit Product-market fit means that there are people who need what you re making

 

And for the market to want your product it has to resolve a genuine problem — something important enough for folks to be willing to open their wallets. Many of the failed startups are victims of the loss of market fit. One of several examples is Swipes a firm that developed productivity tools which managed to run for 6 years or even raise $1 million but never really found product-market fit and at last ran out of money

 

How do you verify product-market fit? Start with building an easy version of your future product and approaching your defined buyer with it. That s what we did when starting Lokalise. Our team created an easy version of the software with just some basic functionalities. We realized that there were people who would pay for that basic version so we continued to develop it

 

Putting Marketing Before The Product And Customers My co-founder and I are firm believers that product and customer success must come before mass marketing efforts. This lesson was learned while building the Roamer app which reached over one million satisfied users in a few months. The more effort we put into customer service the more positive our customers were toward our product

 

As a result the app received high reviews on app stores despite the mistakes and mess ups which are inevitable for each business. After we started Lokalise the product itself and customer success were our top priorities. Today most of our new customers still come from word-of-mouth marketing the main powerful marketing strategy

 

Hiring Talent For Cheap And Not Taking Care Of The Team Your startup will only be pretty much as good as the people building it. Therefore trying to save on talent is ineffective and just foolish. Once you ve found the right people invest in them and their work satisfaction

 

That was a mistake I made when building Inbox. lv. Not looking after my employees and their well-being resulted in people leaving the company after a few months. Now at Lokalise we pay great attention to such things as employee onboarding motivation systems professional growth opportunities and more. When hiring we look for those who find themselves smarter than us so that we are able to learn from them

 

That offers us confidence that our company is in good and professional hands. Creating A Process Debt From The Early Days Process debt refers to the amount of cash had to fix problems attributable to earlier suboptimized processes or a loss of processes. For example if you don t have standardized employee onboarding procedures from day one that possibly a fancy problem to fix once you realize that folks you hired a year ago still don t understand the company s mission

 

Once you start a new business you should wear all possible hats and process management understandably is not your top priority. However even a bit thinking ahead can save you big headaches inside the future. Despite my previous experiences we still have some process debts in Lokalise which is without doubt one of the biggest challenges to solve

 

Only in the near past we finished working on systemized employee onboarding sales and client support processes that ideally must have been in place from day one. Forgetting The Product Must Be Easy To Start Using And Difficult To Quit As you create your product your mind is maybe bubbling with ideas — think of each of the features and design elements you may add! However as opposed to implementing all your ideas right from the beginning keep your focus at the main customer problem and that feature or couple of features that solve it

 

To help you keep your product simple and simple to start using yet addictive enough that customers continue using it. The 1st version of Lokalise had only three features: machine translation webhooks and API. These features allowed users to make certain faster and more consistent translations and organized translation process management

 

It solved the most important challenges of content localization which made our users stick. Forbes Technology Council is an invitation-only community for world-class CIOs CTOs and technology executives. Do I qualify?

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