Share to Facebook Share to Twitter Share to Linkedin Parna Sarkar-Basu is the founder of B&B Consulting and writes about entrepreneurship, transformation, innovation & tech for good. getty In the fast-paced world of tech startups, innovation and disruption are the name of the game. Behind the headlines of billion-dollar valuations and overnight successes lies a harsh reality: About 20% of newly launched businesses fail within their first year, and about 50% are unable to survive the fifth year. Yes, we’ve all seen these stats. I’ve had the privilege of working with savvy leaders and innovators all throughout my career. I’ve been instrumental in helping prepare for IPOs and acquisitions to fundraise and repositioning established businesses for sustainable growth. As a mentor on accelerators and advisor to emerging tech founders, I’ve also had a unique perspective on the hurdles businesses face and the devastating consequences of avoidable mistakes. Having crossed the six-year mark as a founder, I’m sharing some common mistakes startups make and suggestions on how to avoid making the same mistakes. 1. Validate market need instead of designing the product first: A report from CB Insights found that 42% of startups cited their number one reason for failure as tackling problems that are interesting to solve rather than those that serve a market need. Yes, I’ve seen this movie too. So, before investing time and resources into building a product, conduct extensive research to see if there’s a genuine market need for it. Identify your target audience—pick one to start with—then learn about their pain points and see if your product is indeed the solution to their problem. Understanding their needs will also allow you to prioritize features and functions that matter most to your customers. 2. Focus on benefits versus product features: Startups often get caught up in the excitement of building innovative products and showcasing cutting-edge capabilities. Instead, shift focus from building cool tech to building solutions that make a tangible difference from the outset. Investors and customers aren’t just looking for flashy technology; they care about the benefits, such as how the product will improve lives, their bottom line or the world at large. For instance, a robot that can move patients safely and with dignity from the gurney to the hospital bed would be a game changer. It would also free up nurses to focus on patient care while reducing their risk of injury. Merely touting a “first-of-its-kind platform” without explaining its real-world value won’t suffice. To stand out in a crowded market, look at your product through a customer’s eyes and clearly communicate its benefits. MORE FOR YOU Leak Reveals Joe Biden Could Be Planning A Crypto Coup Amid Bitcoin, Ethereum And XRP Price Swings NYT Strands Hints Spangram And Answers For Thursday June 13 Samsung Leaker Reveals Specs And Price Of New Galaxy Z Fold 6 3. Invest in experts versus relying on free resources: As entrepreneurs, we’re wired to save money wherever possible. Relying on free or cheap resources may be tempting. But when it comes to building and scaling a business, cutting corners on expertise could have devastating consequences. Bringing in friends or students without the necessary skills or expertise can lead to products that don’t work as intended, harm people or even land your company in legal hot water. The damage to your brand reputation can be irreparable. Instead, invest in experts and advisors who have the specialized knowledge you need to succeed. Whether you’re growing from seed to $3 million or scaling from $5 million to $50 million, surround yourself with talented and passionate people who share your vision, complement each other’s skills and can help you overcome challenges. 4. Ensure legal and regulatory compliance: Navigating the legal and regulatory landscape is essential for tech startups, whether you are creating an automated solution to clean operating room instruments or developing an app for digital nomads that provides access to their medical records, irrespective of the city they are in. Ignoring intellectual property rights, data privacy laws or industry-specific regulations could result in legal challenges and financial penalties, which in turn will negatively impact your business. Make sure you tap into your network to identify a reputable law firm with specialty practices to help you be compliant with all relevant laws and protect intellectual property adequately. 5. Pivot versus staying the course: Having successfully collaborated with founders and business leaders on business transitions, I can confidently say that pivots are critical for success. Yes, CB Insights data says about 6% of startups fail because of pivots gone wrong. That’s not too bad in the grand scheme of things. In another study from Skynova (via CNBC), 40% of the founders said they had previously pivoted their startups in some fashion to avoid failure, and 75% of them said pivoting helped lead to success. Founders must understand that staying the course could lead to failure and they need to be agile to meet market changes or emerging trends. It’s important to shift direction and capitalize on the opportunity to become relevant in your industry. The bottom line: Whether you’re a seasoned founder or just starting out, take a hard look at the pitfalls that can derail even the most promising ventures. Steer clear of bad advice and increase your chances of success in the market. Forbes Business Council is the foremost growth and networking organization for business owners and leaders. Do I qualify? Follow me on Twitter or LinkedIn. Check out my website. Parna Sarkar-Basu Editorial Standards Print Reprints & Permissions
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