Common Mistakes Startups Make

Man wearing gray short-sleeve shirt pointing at post-it notes of his brainstorm ideas.
Man wearing a gray short-sleeve shirt pointing at post-it notes of his brainstorming ideas

Have you had a unique business idea for a while now, and you’re seriously planning to bring it into reality? Before you take any steps, you should know that 75% of startups fail. According to a U.S. Bureau of Labor Statistics report, about 20% of new businesses fail in the first year, 45% fail in the first five years, and 65% fail within the first ten years. Only 25% of new businesses survive for 15 years and over.

The big question is: Will your startup succeed? The answer to this question is found in the content of this article.

Mistakes are inevitable. However, many startups make avoidable mistakes. This article will reveal common mistakes startups make and how to stay clear of them.

☑ Quick Answer
Common mistakes startups make include poor strategy, rigidity, miscalculation of startup capital, hiring the wrong people, scaling too early, and fear of failure, according to statistics.

Six Common Mistakes Startups Make

Here are some mistakes that startups make:

1. Fear of Failure

A graph illustrating a decline
A graph illustrating a decline

Setbacks and failure are bound to happen, no matter how smart or dedicated you are. This is because business trends are constantly evolving. According to a report by Statista, over 35.2% of U.S. businesses experience the fear of failure.

While it is good to plan essential components of your business, you can’t plan out the future for everything. Some parts of your business plans will be discarded as you grow.

A survey of 65 entrepreneurs published in the Journal of Business Venturing identified seven common sources of fear. They are:

  • Opportunity costs
  • Financial security
  • The potential of the idea
  • Personal ability/self-esteem
  • Threats to Social esteem
  • Ability to fund the venture
  • The venture’s ability to execute

Take failure with a grain of salt and see it as an opportunity to learn something new. If you are afraid of it, it will prevent you from taking crucial risks that will benefit your business. When you are afraid of taking risks, you will eventually encounter what you hate most— failure.

Keep an open mind towards changing your product or service as often as possible and needed. When going through tough times, remain focused and do not get frustrated.

2. Miscalculation of startup capital

A piece of paper, a calculator and cash to indicate funds calculation
A piece of paper, a calculator, and cash to indicate the calculation of funds

Besides the costs of setting up your business, you’ll probably incur other expenses before you start making a profit. It is vital to add all these when considering the startup capital your business needs. Surprisingly, research data reveals that the source of funding impacts a company’s performance.

Also, remember to make provisions for unforeseen circumstances. The business world is crazy and anything can happen, and you don’t want to be left in circles. Insufficient finance can hinder the progress of a promising business. When sourcing capital, analyze all available choices and select the best one that fits your needs.

3. Poor Strategy

A man drafting a business strategy
A man drafting a business strategy

Many businesses take off without a definite plan. Some believe that they will figure it out as their businesses grow. However, this is bad and accounts for one of the reasons many businesses crumble within the first few years. You should take your time to plan to business and consider every aspect of your business.

According to statistics, 98% of leaders believe implementing strategy takes more time than developing strategies.

You need to set long and short-term realistic goals. In addition, draft out those goals into step-by-step processes that speed up the whole process. Goals help motivate you to stay on track.

4. Hiring the Wrong People

A workspace of six employees performing their duties
A workspace of six employees performing their duties

Most new companies have a shoe-tight budget because of their increasing expenses. Sometimes, they ask their staff to perform some roles. You should only hire employees who understand this and are willing to take up different responsibilities to help the company grow. A 2012 study published in Procedia Economics and Finance Journal shows that the performance of employees affects the growth of a firm.

Therefore, hire only people that share your vision and are willing to put in their efforts.

If you hire passionate and dedicated employees who are not afraid of leaving their comfort zones, there’s a higher chance for your startup to succeed.

Consider and look past credentials. Most people with outstanding credentials won’t be willing to sacrifice their time without monetary rewards. When screening prospective employees, you should prioritize character and attitude.

5. Rigidity

A man displaying his innovative plans on a white cardboard paper
A man displaying his innovative plans on a white cardboard paper

Every great and successful company possesses features such as flexibility and adaptability. Businesses should please their target market (i.e., customers), and not displease them. To succeed in your business, you must be willing to learn, re-learn, and unlearn. According to research published in the Strategic Management Journal, threat rigidity affects the performance of small or large businesses.

If your business plan isn’t functioning, revise it or develop a new one if possible. For instance, many businesses are already utilizing AI technology in their workspace to save costs and time. You cannot keep on doing the same thing and expect a unique result.

Rigidity also kills successful businesses. Let’s use Blackberry as a case study. A few years back, the smartphone brand was the biggest name in the market. But everything fell when the company failed to follow market trends and meet the needs of its customers.

With rebranding, you can maintain relevance and fix the issue of diminishing popularity.

6. Scaling Too Early

An illustration of a businessman scaling too early
A businessman scaling too early

Expansion is important and highly recommended. But, you need to consider a few factors before expanding. A survey of 3200 startups reveals that 70% fail because of premature scaling.

Give your business some time to grow first before you consider expanding. If you scale too early, you will end up increasing the expenses without generating enough income.

The costs of setting up offices, hiring new employees, getting more tools or machinery, and other things will suck up your funds until you have little or nothing left to run your business.

Unnecessary haste won’t take you far.


The business journey is not an easy one. You must be willing to put in a lot of effort, focus, dedication, and time into nurturing.

You will experience challenges. In some bad moments, you’ll feel like calling it quits. And you might make new mistakes, no matter what.

Nevertheless, no matter what happens, don’t let go of your dreams and keep pushing. You’ll achieve your dreams someday. In addition, never stop learning and unlearning. Don’t stop looking for ways to improve yourself and your business.

Which of those mistakes do you think is common? Do you have any experience in starting or running a business? Share some tips you’ve learned from your journey. I’ll expect your comments.

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About Author

  • Banjamin Mayfield

    Benjamin Mayfield is a former business analyst. He become a full time content writer out of passion to help people grow their businesses. In addition, he has been in the writing business for over five years, producing several thoroughly researched articles, and receiving accolades for his dedication, quality and efforts.