Adeo Ressi is Founder and CEO of the Founder Institute, where he and his team mentor hundreds of first-time founders. In addition, over the last 20 years he has founded several successful companies of his own. So when we asked him about the typical mistakes that first-time founders make that could prove fatal to their companies, we listened!
Ressi emphasizes that the fatal mistakes are often made in those critical first few months in the founding of a new company. That's when every move can have a huge positive or negative impact on the fledgeling company. During this time the founder needs to make a lot of critical decisions in a short period of time.
According to Ressi, there are at least six fatal mistakes that new founders often commit. Let us know other mistakes that you see founders make (or that you've made yourself) in the comments below the post!
The 6 Fatal Startup Mistakes
- Selection of initial team and cofounder — Getting the wrong people involved in your company can lead to ineffectiveness, arguments, stalemates, power struggles, and worse: the death of the company. Add new people very carefully.
- Structuring of company, cofounder, and team deals — Managing compensation, stock, or options wrongly can set the company up for failure. Also, care must be taken with any initial investors and how their deals are structured. It's almost impossible to undo poorly structured deals.
- Adoption of technology — If you pick tech which is unpopular or unusable, your company won't grow as fast, you'll have trouble finding good developers, and your product won't be top-notch.
- Business and revenue models — Selecting a business model that allows the company to grow and (eventually) become profitable is critical.
- Go-to-market model — Determining how your company will reach customers is a decision that will make or break success. Consider your sales approach, partnerships, and distribution options carefully.
- Name of the company — Even something like the wrong name can be potentially fatal. If it doesn't communicate the benefits clearly, or is too silly or difficult to pronounce, type, or remember, tread carefully.
In the genesis of a new business, every decision that the founder makes, large or small, can have fatal consequences. So take care with each of these six points raised by Ressi, and seek help during this important time period. To learn how the Founder Institute can help your startup, visit their website.
Have your own story to share? Tell us about other fatal startup mistakes in the comments below.