According to statistics, 30% of startups do not survive the first year, 50% of startups are closed within 5 years, and at least 67% will face bankruptcy in the first 10 years of activity. As a result, 90% of startups do not live to see all of their goals.

Analysts at the American Small Business Association have identified the most common mistakes startup founders make. If you don’t do them, a startup has a chance to get into 10% of successful companies. 9 Top Entrepreneur Startup Mistakes and How Founders Can Avoid These Mistakes.

1. Low-skilled employees

Startups and micro-companies often save money by hiring unskilled workers instead of expensive, experienced professionals. This is one of the most common causes of startup failure.

However, the achievement of goals, the implementation of plans, the level of service completely depends on the experience and skills of employees. The team is the main asset of any startup.


  1. Plan the selection of employees, carefully approach the interview and assessment of candidates.
  2. Check for experience and references from previous employers.
  3. Determine in advance what skills and qualities are needed for each position in the company and conduct employee training.

2. Delaying product release

Many startups go broke because they delay the product launch too long – out of perfectionism. By the time the ideal version is finally ready, it often turns out that competitors have already taken over the market, or potential consumers have lost interest in the product.


  1. Release the minimum viable version of the product – MVP.
  2. Even if the product has many flaws, customer feedback will help to refine it.
  3. Early launch will provide market share and testing to target audiences.

3. Undefined business plan

Aspiring entrepreneurs often have an unviable business model – with blurry presentations, unclear plans, and unrealistic expectations. The consequences of such a model are incorrect goals, incorrect performance indicators and a complete lack of a clear algorithm of actions. That’s enough to ruin any rudimentary startup.


  1. Develop a clear and realistic business plan with the help of a finance professional.
  2. Ask for constructive criticism from fellow professionals.
  3. Get the opinion of potential investors.
  4. Review the business plan often and make adjustments as needed.

4. Do it yourself

Organizing and developing a business is a complex task with many components that a team of versatile specialists can handle more effectively than a single founder. The company is not strengthened by personal effort, but by collaboration and teamwork.


  1. Work with partners who can objectively evaluate the business plan.
  2. Before choosing a co-founder of a startup, conduct a SWOT analysis of each partner.
  3. First of all, evaluate the level of stress resistance.
  4. Make sure all goals and vision are aligned.
  5. Recruit people with a variety of skills and experience to join the team.

5. Using all investments early

Spending all funds at the initial stage of development will lead a startup to bankruptcy even before the product is released to the market. That being said, there are many ways to cut upfront costs.


  1. At an early stage, it is worth using only personal funds – property and savings.
  2. Self-financing will help the entrepreneur to clearly see all the income and expenses of the business.
  3. Be creative – recruiting volunteers, trainees, using barter.

6. Ignoring user feedback

A startup that ignores negative reviews and customer comments is doomed to bankruptcy.


  1. Take constructive criticism seriously.
  2. Always find the root cause of the negative reaction of the target audience.
  3. Openly admit deficiencies and cover work to correct them.
  4. Demonstrate changes and additions made to the product at the request of users.

7. Being distracted by secondary goals

The main thing for a startup is development in full accordance with the algorithm developed in the business plan. For example, one of the main reasons for failure is overspending on uncritical, unimportant, secondary items, such as social media marketing before a finished product is released.


  1. Do not be distracted by unimportant tasks.
  2. Concentrate your efforts on two areas – the product and the target audience.
  3. Do not spend funds on items not provided for in the approved business plan.

8. A non-customer-centric approach

The best way to go bankrupt is to use all approaches except customer-centric to develop a startup. The main reason for all failed startups is to launch a product or service just for the sake of profit. Of course, profit is the ultimate goal of any business. At the same time, you can hardly give an example of a successful and profitable company that does not produce anything useful.


  1. The product or service must solve important problems, problems and misfortunes of potential customers.
  2. The approach should be aimed at solving the problems of the target audience in the first place, not making a profit.
  3. Communicate with your target audience, accept and consider criticism and suggestions.
  4. Improve, change the product or service in accordance with the changing needs of consumers.

9. Premature scaling

Genome’s research found that out of 3,000 failing startups, 90% went bankrupt precisely because of premature expansion. Scaling up has included renting premium offices, excessive marketing costs, and product perfection using overly expensive technology.


  1. Do not scale your business unless absolutely necessary.
  2. Control all financial flows, the balance of expenses and income.
  3. Hire a highly qualified accountant.
  4. Increase expense items only after a corresponding increase in income.


The above mistakes are universal and common to startups from all business areas. Since 90% of bankrupt companies have committed all or most of these mistakes, avoiding these mistakes is guaranteed to ensure the stable and successful development of the startup.

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