A startup founder has a lot to be excited about. They have a budding business, and they are even likely employers. But businesses are not always a bed of roses. In fact, the pitfalls and responsibilities of running a business makes it challenging for founders to keep up. 

The pitfalls in business are things that could lead to stagnant growth, poor internal relationships between employees and employers, disinterested workers, low productivity, or worse still, grounding of the business. We’ve identified 9 of these issues below with suggestions on how to navigate them. Have a fun read. 

Pitfalls Every Startup Founder Should Avoid

Hurrying About Business Growth

As a founder of a new startup, you naturally want to see your efforts bear fruits. You are excited about onboarding new staffs, you want to expand your products and services, and you can’t wait to serve new and diversified customers. 

All these would likely put you in a hurry. And once this happens, you may tend to overlook the daily and less glamorous aspects of your business. By now, we imagine that you understand why this is a pitfall. If you haven’t, we’ll tell you. 

The small and less glamorous aspects of a business is what adds up to business growth. This growth, including expanding into new markets, is the more glamorous aspect of a business. But it is the daily input of hard, and perhaps, bitter efforts that creates that. Therefore, by focusing entirely on the goal, you have less time to attend to the processes that will actually help you reach the goal. 

Acquiring Investments To Fund Plans Rather Than Making Plans Worth Investing In

Sourcing funds is so important to a business, it could almost be categorised as a skill. This funding keeps businesses running. It also provides a means for scaling or expansion into new markets. 

While all of this is true, there is still a danger associated with fundraising and acquisition. The danger is that startup founders sometimes go off track about it. This happens when they focus entirely on raising funds rather than on creating fund-worthy plans. In fact, founders sometimes tend to raise funds as a means of creating business plans when it should really be the other way round. 

Growing Out of The Reach of Information

Think of the CEOs you see in the movies. Sometimes you’d notice that they are bossy and on top and have grown out of the position where staff or employees can reach them. This is a pitfall for founders. Unfortunately, it is also quite common. 

Founders who have the practise of shutting off employees, failing to see any good in their ideas,  and failing to recognize or appreciate employee efforts are on top of the list on this one. 

Their bad and harsh character makes them unapproachable. As a result, employees will tend to hold back certain information. This could be out of fear of the employer’s reactions, or a difficulty in 

Misinterpreting Sales or Financial Data

Whether you’re making a personal assessment of your revenue or presenting to a group of investors, there is one thing you shouldn’t do. This one thing is misinterpreting or exaggerating your financial data. 

The problem with making a wrong financial assessment is that it gets investors expecting more than they should. This could breed legal actions when such expectations are not met. Furthermore, it could result in reputational damage, poor operations, and even bankruptcy. 

No Detailed Vision, Plan or  Strategy

It might sound really surprising but many young startup founders launch their business without first creating a detailed strategy or plan. In another instance, some young founders make fully detailed plans but these plans fail to cover every aspect of their business.

Both of these cases represent a pitfall. They are the reasons why many startups fail to make it past the first year of operation. 

The aspects to consider when planning a startup are the facilities and location, customer acquisition and relationship, permits and licenses, management, marketing, capitals, and the ownership type. Together, this creates a holistic approach for founders. But just as we’ve mentioned, one’s knowledge of these aspects is only as good as their level of preparation. 

Jumping Into an Unknown or Uninvestigated Market

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Experienced founders sometimes have a challenge dealing with changing market trends. If such an issue is not quickly addressed, the business could lose relevance and ultimately collapse. This horrible situation could happen even despite the fact that experienced founders venture into familiar and well-investigated markets. Now, imagine that they did otherwise. 

Underfunding Employees

Everyone knows that startups are typically tight on cash. Nevertheless, it is unwise to underfund employees. Founders may plan for everything (even when they don’t make deep, thoughtful plans) but they often forget to plan for their employees. 

You would see these founders put money into developing several aspects of their business including buying machines, getting subscriptions for various products and services, and even paying heavily for advice or consultations. 

However, many of them negotiate low compensations when hiring employees. Worse still, they don’t make plans regarding employee wellbeing, promotion, and retirement. All of these issues contribute to poor performance on the part of the employee. 

Creating Unnecessary Roles, and Hierarchical Positions

It might be exciting to see that your startup has a number of co-founders, assistants, deputies and all of that. But there is an important question you should ask. The question is whether these assistive roles are really necessary or not, especially for a startup. 

You see, sometimes, assistant and deputy positions only work in beautifying an organisational hierarchy. Outside that, they have little or no impact on productivity. This is because the personnels in these assistive positions usually either do far less or far more work than their direct superiors. 

In the case where a deputy or an assistant does far more work than their direct superior, a startup founder may promote the deputy to the lead position and close down the deputy position. Alternatively, if a deputy puts in far less work than their direct superiors then a founder could relieve them of their duty and proceed to close down the deputy position. 

How would this benefit a startup founder or the company itself? Here’s it. There’ll be less traffic for information flow from leads to founders. Secondly, the company will save on revenue since it will have only productive and result-driven employees on its payroll.

Wear or Exhaustion from Excessive Stress

New founders are energetic. They are highly motivated and they are inquisitive to make sure that everything is going on as planned. This is good. However, it could easily cause stress and when not checked, it could deteriorate to burnout and exhaustion. 

To avoid being in this situation, founders need to set up a system where employees or partners automatically report their status and work progress. This reduces the activities on their side. 

Additionally, they could promote a work life balance by planning employee excursions, enforcing the observance of breaks and public holidays, and making room for health and leisure activities. 

Conclusion

We have listed 9 pitfalls every founder should avoid. These are real issues that have caused businesses to collapse, and even put some founders in trouble. These pitfalls are specifically costly to startups because founders of these young companies may not have sufficient experience to navigate these issues. So you see why it is important to totally avoid them? Of course you have. We hope to hear how this article helped you.