4 Common Startup Mistakes (and How to Avoid Them!)

Mallika Khandelwal

28th Mar'22
4 Common Startup Mistakes (and How to Avoid Them!) | OpenGrowth

We’re living where many young entrepreneurs from all over the world are trying to develop new business ideas. However, before you get carried away, it’s important to know that each startup, no matter how innovative the concept, is operating within a very competitive market. NY Governor Andrew Cuomo recently launched an initiative to train and educate small businesses in today's digital economy, which goes to show how competitive the landscape has become.

The stakes are high, so it’s important that every step you take to establish your startup is deliberate. Here are four of the most common startup mistakes that you should avoid:


Business Structure


Choosing the Wrong Business Structure

Choosing the wrong business structure can make legal matters complicated. For startups, the best business structure to choose would be a limited liability company (LLC). According to AskMoney’s guide to limited liability companies, establishing your business as an LLC can increase your legal protections as a business owner. Let’s say you own a car repair service. If one of your employees damages a client’s car, your client could legally press charges against you. However, if your business was designated as an LLC, your client would only be allowed to sue the business itself. LLCs also have more flexibility when it comes to accounting, taxes, and location.


Having an Unclear Purpose

Today’s hyper-aware market means that customers are interested in understanding your company’s story. Finding a "why" behind what your company does can ground your operations, and communicating your company’s purpose can help customers connect with your brand.

According to our article on mission and vision, developing a clear vision can be a great place to form a strategic direction. Your mission statement defines what your business's primary objective is, while your vision statement illustrates what the future might look like once your business achieves its goals. Having clear goals to work toward can help keep all members of the team motivated.




Not Keeping Your Funding in Check

Once you’ve secured your pre-seed or seed funding, it’s tempting to go big. Many founders end up squandering their funds right away, but it’s important to remember that funders get more risk-averse the higher you go up. Investopedia’s guide to series funding notes that Series A investors are especially careful, as this is the pivotal moment that defines how a startup will establish its operations and actually get the ground running. While it’s good to spend your funding on nice office space and facilities, just remember that you have other rounds of funding to consider.


Keeping Your Operation to Yourself

The problem with any small operation, especially one that’s just starting out, is that owners want to keep their operations to themselves. The Balance maintains that delegation for business owners is important because owners who take everything on, end up hitting a ‘success stopping point’ where the business operations start suffering because the owner ends up getting burnt out. With freelance and remote employees on the rise, owners can easily take advantage of this growing market and hire staff as needed.

The exciting startup atmosphere is infectious, and it’s easy to get caught up in the startup craze and feel like it’s time to start your own. Avoiding common mistakes is key to ensuring your startup gets off the ground.


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A staunch proponent of karma, Mallika believes in what goes around, comes around philosophy. She is ecstatic with her life and strives to live it to the fullest.


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