Start-ups are now a very popular way for people to get rich, especially for people in the tech industry. Contrary to popular belief, however, the odds that you will become a billionaire through are a start-up are low. About one in five million self-funded startups end up becoming with over $1 billion, and for every 1,000 start-ups that meet with investors, only around two actually obtain funding. Even then, if your start-up gets funded there is only a one in ten thousand chance that it ends up becoming worth over $1 billion.
That being said, there are ways to minimize risk early on, and this will help you increase your chances of success in the long run. Here’s the 8 main tech start-up sins that anyone hoping to make money should absolutely avoid.
1. Failure to find unsolved customer pain
The most successful startups tend too offer a product or service that nobody else offers, namely because it involves solving a painful problem that nobody else is willing to solve. It is sadly the case however that too many people think that their idea is so good they should roll out the product straightaway and simply wait for the money to come in. The reality is people are reluctant to try a start-up product unless it does this job of solving a problem that no other product is willing to.
2. Not enough passion for the industry
A general rule of thumb is to not start a tech start-up if you’re single motivation is to make lots of money. When it comes to start-ups, you really need to be spending about 90 hours a week with little to no pay if you want it to have any chance of success. It almost impossible to do work this hard and still be effective unless you are extremely passionate about the product. What will end happening is you will either burn out or end up with a lack luster product, and this is why passion is needed for true success.
3. Being too fiscally liberal
If you’re somebody who can’t save, don’t start a tech start-up. Many tech entrepreneurs are really engineers at heart, who want to build the perfect product and show the world their brilliance. They read about how easy it is to get investors and believe it won’t for them to do the same. This leads to them ignoring how fast they are burning through their cash supply as they assume that when the time comes to replenish, investors will be head over heels writing checks. The best networkers spend only on essentials and are always looking for new investors.
4. Reluctance to receive criticism
One of the most common errors, particularly among tech start-ups, is refusing to let people see the product until it is perfect. There are many reasons for this. For instance, some people are scared their idea will get stolen, they are afraid nobody will buy it, or they may simply want to impress their peers more. However, failing to receive constrctive feedback from (potential) customers is almost always a death sentence for tech start-ups.
5. Lack of tech skills
If you think the job of a CEO for a tech start-up is to simply thinking up theoretical ideas and hiring other people to do all the practical work, you’re dead wrong. A big reason start ups fail is because CEO’s can’t do the work that is needed to get the product running. Many tech startups have failed because the founder couldn’t code properly, for example. In the end, your odds of success lie largely on how much you know about software and related fields when it comes to tech start-ups.
6. Inability to raise funds
If you have never raised capital for a project before, you will probably be surprised at how difficult it is. The truth is that you will be rejected over and over before somebody says yes. To avoid this, you should make sure you’re presenting potential investors with the right information that will lead them to actually invest.
7. Poor leadership
A true start-up killer is a leader who fails to recruit the best people for the job. This is equally true if he finds the right people but is unable to motivate them. The hard reality is that if you aren’t a natural leader, it is very hard to become one, even if you train hard. In addition to this, the skills needed for a 10- person start-up are much different to those for a 500-person start-up. However, a good leader always has charisma, a good track record of success, and a compelling vision.
8. Weak team
Finally, a weak team is just as bad for a start-up as a poor leader, make sure you don’t make either of these mistakes!