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Top 4 Mistakes Software Startup Entrepreneurs Need to Avoid

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Software Startup Entrepreneurs

Most software startup founders are people with brilliant ideas but have no experience in establishing and running a startup. Not surprisingly, they encounter several problems that can slow down the growth of the startup or even kill it quickly. Some common mistakes early-stage startup founders tend to make and how to sidestep them:

Verbal Commitments of Software Startup Entrepreneurs

Startup Entrepreneurs tend to focus more on getting things off the ground and making the venture sustainable. While handshake deals allow entrepreneurs to move faster, things often tend to fall apart when it is clear that the startup is stabilizing and acquiring value.

Dissension can complicate vital decision-making, including funding and formulating a viable exit strategy, not to speak of ruining relationships that lead to the birth of a profitable venture. To avoid it, entrepreneurs should document all agreements for alignment and clarity and evaluate them for practicality if the startup is successful.

Not Focusing on One Type of Customer Concern 

software startup company usually cannot address multiple concerns, given resources are thin. Launching multiple products or services to address different needs of buyers can be tempting, but you may possibly leave all of them dissatisfied.

Even if several types of buyers have real unmet needs and you perceive lucrative market opportunities, it is important to focus on your prime target audience and desist from launching more products till you have perfected the first.

Focusing on Growing Without Proper Product-Market Fit

Since most investors focus on revenue growth as an important metric for funding, entrepreneurs also want to grow revenues quickly and build go-to-market companies.

You need to ask yourself if your products or services meet a real market need and if people are willing to buy. You need to examine the market potential and economics of the company’s operation. Building a go-to-market company makes sense if you can tick all the checkboxes.

However, if the answers leave you dissatisfied, you need to spend more time and effort finding products with better market potential and acceptance. According to CB Insights, as many as 35% of startups fail due to a lack of market potential!

Parting with Equity Too Easily 

In the early stages of the startup, cash is liable to be scarce, and it can be tempting to give away equity when the company is not yet valuable. However, if you believe that the company meets the real needs and aspirations of the target audience, can address a sizeable market, and has good potential.

You should restrain yourself from parting with equity too soon to investors, employees, family members, or friends who may be pitching in to help you out. It is vital to consult with a merchant banker to arrive at a proper valuation of the company, structure, and terms to best leverage the funds.

Conclusion on Software Startup Entrepreneurs

As a software startup, the possibilities are immense. You must maintain a clear focus on what you are good at, what audience you will focus on, and who your competitors are in the given space. When you benchmark yourself, as you should, you must do it with the people you are up against, who may not necessarily be the market leaders.

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