Starting a new company is an exciting but challenging venture. According to recent data, about 70% of startups fail within the first 20 months, often due to common mistakes that could have been avoided.
To help entrepreneurs avoid these pitfalls, we spoke with Wole Ogunlade, a startup growth expert.
Currently, Wole is the Director of Partnerships for a UK based global payment company that is processing $20m USD for merchants monthly. As lead of partnerships he oversees teams across UK, US, India and Africa.
He previously led growth at Metro Africa Xpress, a VC-funded mobility startup in Africa and at VoguePay a payment company that started from a humble beginning in 2012 but went on to cross $100m USD in processing and serves over 100,000 merchants in Africa, Europe, Asia, USA and Canada.
In his role at VoguePay, Wole was responsible for digital media and strategy where he oversees the growth strategy of the business.
Wole has had many interactions with startup founder over the course of his career. He has been able to mentor over 500 startups and founders through programs like Google LaunchPad, Tony Elumelu Foundation, Seedstars, ccHub and several other platforms where he has directly helped entrperenuers to launch their MVP, prepare for funding and expand their businesses.
As someone with a passion to contribute to the tech ecosystem, he has published over 50 articles on startup growth on his personal blogs and other high profile tech blogs in Africa.
He also mentored business leaders through series of events he had hosted in partnerships with HotelsNG, Tekedia Institute and ccHub with more than 5,000 people in attendance.
According to our business growth expert, below are key mistakes entrepreneurs must avoid;
1. Not validating the market
One of the biggest mistakes early-stage startups can make is failing to validate their market. It’s crucial to conduct market research, gather customer feedback, and test your assumptions before investing too much time and money into your business. If you do this right, this will ensure you know how to extract maximum revenue from the market you serve. For example, when Voguepay started, its core product was online payment processing for local businesses.
After realizing that there is a bigger opportunity serving global customers, VoguePay launched cryptocurrency payment in Nigeria and built a larger business on its international payment gateway which resulted to a much more profitable market.
2. Failing to develop a clear value proposition
Another mistake early-stage startups can make is failing to develop a clear value proposition that resonates with their target audience. Your value proposition should clearly explain how your product or service solves a problem or fulfills a need for your target audience.
For example, when PushCV launched in Nigeria, it had several competitors in the job listing market with Jobberman as the market leader.
To thrive in this market, it launched with a clear value proposition that positioned it as the largest pool of pre-screened candidates in Africa that connects best talents to top employers and recruiters.
This clear and concise value proposition has helped them become a household name in the HR/Job placement tech industry.
3. Neglecting to build a strong team
Building a strong team is crucial to the success of any startup. Most startups fail because they don’t have the right team.
The team is the backbone of any startup, and the wrong team composition or dynamics can hinder a company’s growth potential. A team that lacks the necessary skills or experience to execute on the company’s strategy might struggle to make progress, or might make costly mistakes.
Additionally, a team that doesn’t work well together or has poor communication can lead to a lack of alignment and focus, which can also hinder growth.
There are several examples of startups that failed due to this. In contrast, companies like Paystack and Flutterwave paint a picture of what can happen with a strong team that has a mix of experience and skills. The founders have a background in finance and technology, and have brought on team members with expertise in engineering, marketing, and business development.
4. Chasing Short-Term Gains
Startups can also fall into the trap of chasing short-term gains at the expense of long-term growth. In other to please the press, some founders prioritise vanity metrics that makes it appear that they are successful, but this could be misleading.
It is important to build a sustainable business model that will support long-term growth. This is more important because startups have limited access to funding, unlike in Western world.
5. Lack of Focus or Strategy
One more common mistakes that startups make is trying to do too much too soon. Startups that try to be everything to everyone often struggle to make meaningful progress in any particular area, as resources are spread too thin. A lack of differentiation can also make it harder for startups to stand out from competitors.
By defining a clear focus and strategy, startups can better allocate their resources and differentiate themselves in the market.
To conclude, Oluwole advises that startups that are struggling to grow and are unsure of what steps to take next need to take a step back and reassess their strategy and approach.
By understanding these mistakes and taking steps to avoid them, startups can position themselves for long-term success and growth.