To err is human. Entrepreneurs are no different. There are inevitable mistakes that any entrepreneur can make—a newbie or a pro. However, some errors can be costly for many startups and result in significant failures.
Once small scale startups such as Zomato and Amazon have now expanded exponentially. The underlying inquisitive approach and proactive decisions of their vibrant founders is an inspiration to all.
In this blog, we put together a list of common mistakes that startups make and offer tips to avoid them.
Fear to experiment with the new
The on-demand world is full of opportunities. Few among us make efforts to explore them. The rest of the minds are busy copying and altering the much-invaded spaces. For instance, after the success of the on-demand food delivery business vertical, 3 out of 5 upcoming on-demand startups want to launch a food-tech business.
Though there is nothing wrong with following the footsteps of successful business models, how will you define your presence when your potential customers are already loyal to the market’s established incumbents?
Have you talked to your users to understand what they really want at the moment? The process of listening to the demand of customers is the key to conceptualize your on-demand business idea.
As the Slack founder articulated in his famous memo, the process of understanding what users want and will find genuinely useful is hard because quite often they have no idea that they want it!
Business Tip: Listen to your users, not investors, to build a stack rank of what they really want
It is better to walk and fall for yourself rather than repeating someone else’s journey.
Build a great product or address a big market
The on-demand startup world is growing at a rampant pace. Budding and established entrepreneurs are competing to create impact in the industry. But most startups fail. Do you know why?
There are no great products and great markets. A great business is about how well your product fits the market. Build a product to complement user's problems with a unique solution that is so much better than alternatives that they are willing to pay good money for it.
A recent tweet by one of the first product managers at Stripe speaks about how a business goes into endless struggle due to misunderstanding the stack rank of user’s problems. The shortcut to smoothen the journey is to ask, identify and prioritize the list of needs. When the foundation of a startup is grounded in user understanding, there is much room to experiment and grow.
A planned preparation for the race helps you to cover halfway even before you start.
Create a complex product
Is your app bundled with a hoard of add-on features and therefore excessive bugs? Does your product have a simple or complex user experience?
Building startups is about going back to the basics. A unique yet simple app has more power to engage customers. Gradually, depending upon the responses, you can enhance the app.
The iconic book Lean Startup lays out a framework to start with a minimal product, iteratively build with validated learnings and reduce waste while sharply meeting the market. This approach enables an innovative businesses to take responsible and timely decisions. Too many startups focus on the “just do it” approach that skips thoughtful validation of what is being done. The unproductive and wasteful deployment of scarce resources might be one of the most common and dangerous mistakes in business. Lean is not about spending less, but about productively applying processes and resources to reduce waste.
Expert Tip: Focus your team to innovate on your business not on your location infrastructure. On-demand businesses can quickly go-to-market with world class location features using location APIs and SDKs.
Burn funds on building everything from scratch
Every penny matters in a business. Are you using your funds correctly? Are you burning money on lower priority or easily replaceable tasks? Superficially, many entrepreneurs rationalize their expenses as necessary to build the business when they can easily plug in a managed service and build on top.
For instance, location infrastructure is a time and cost consuming capability that every on-demand delivery business needs. You might consider it necessary to invest substantial money and resources to make it happen for your delivery business. But is this the best use of funds when building an on-demand delivery platform?
Probably not. HyperTrack’s managed service for location-based automation plugs into your existing delivery app, operations dashboards and business workflows. It offers open sourced apps for you to get off the ground if you are still in the process of building your delivery app. This way you retain all the control over your solution with none of the headache of building and operating complex infrastructure.
Ignore network effects
Businesses lose potential customers due to delayed deliveries. Nagging your delivery drivers results in losing field agents and drivers too. This is a simple example of a vicious cycle. The struggle to balance the upcoming orders, fleet on job and customers waiting at their home is a true and real pain for your delivery business.
On the flip side, startups need to address and introduce the value of network effects in their operations. Imagine a business with the virtuous cycle. More on-time deliveries lead to more customers. More customers with more on-time deliveries mean more drivers make more money. More drivers making more money means more on-time deliveries. Merchants, drivers, customers, and an entire ecosystem will gravitate towards a business with high network effects.
Amazon founder famously drew a flywheel to describe the compounding advantages of the various parts of his business.
So, what’s next? Want to get a head start into the market with an on-demand technology platform?
Now that we have reviewed the common mistakes that on-demand startups make, it is time to bring all these learnings into practice and make your impact in the market.
We would love to take the conversation forward to power your business success. Book your appointment with our experts today.