5 Business Mistakes that Ruin Tech Startups

If you aim to steer clear of the ruins of failed tech startups, avoid these 5 business mistakes that tech founders make over and over again.

5 Business Mistakes that Ruin Tech Startups

Tech startups have a high failure rate.

This probably isn’t a surprise for you. Statistics show that around 90% of startups fail. However, successful startups can yield substantial returns.

Unicorns (startups valued at over $1 billion) have become increasingly common in recent years, inspiring many more entrepreneurs to throw their hat in the tech startup ring.

What’s the difference between the 90% that end up in ruins on the ash heap of failed businesses and the unicorns of the industry?

For one, a healthy startup typically seeks support from accelerators or incubators which provide mentorship, resources, and networking opportunities. These programs can also improve a startup’s chances of success, as studies have shown that startups that go through accelerators have a higher chance of survival and successful exits.

Successful startups also tend to have a strong focus on their customers and a clear vision for their product, as well as a flexible and adaptable approach to pivoting when necessary.

As a business consultant and serial entrepreneur, I have seen and made lots of business mistakes over the years. Though I’ve had many successes, I have also seen many more would-be-successes. While I am always excited for the successes, there are many avoidable business mistakes that are committed along the way.

If you aim to steer clear of the ruins of failed tech startups, avoid these 5 business mistakes that tech founders make over and over again:

1. Not building a company around their product or service.

While many amazing, talented people have brought their genius to the market—whether it’s an app, a product, or a service—they don’t always think about the whole business. They might have a business plan, and they may have even set up some of the tools, but are they really prepared to run a company?

If you want to avoid business failure, there are two vital questions you need to answer:

  • If the company grows, who is going to take on other tasks that need to be taken care of?
  • How much will it cost?

This is the inventor’s or founder’s dilemma. I cannot even imagine how many great products or services never actually made it to the market because they failed to answer these questions and provide a solution.

2.  Not considering how to get customers. 

While it is certainly a subtask of building a company around a product or service, finding sustainable ways to drive business is what cripples many business owners. So many people have had unrealistic expectations about what it takes to succeed in business—whether they are fortunate and come into the market with a few customers, or they are starting from scratch.

A sustainable business must be able to grow beyond friends and family. It requires an understanding of your core market; how, why and when they buy; and how to encourage them to purchase from you.

One of the tragedies I have seen is when a company is built around providing services to one client. Then, when that client relationship ended, the company went out of business.

3. Not Considering Business Growth Strategies 

Some people go into business who are great at sales. They find a great product or service or model that works for them and they are brilliant at pushing it out into the marketplace.

What happens when the company’s growth skyrockets?

This has been the unfortunate fate of a number of companies that have achieved some level of status. They did not control their growth, they over-promised, and ultimately could not deliver on the commitments that they made to their clients.

This can be a death toll for any business.

4. Hiring the Wrong Talent 

Too many tech founders do not know how to recruit talent for a startup.

When going into business, it is nice to get people who like you, and believe in you, to help run the company. Frankly, those relationships often get, shall we say… sticky. While people close to you often have the best of intentions, that doesn’t necessarily mean they are the best people for the company.

The other side to this is hiring people solely based on price. If you get someone to come in at an extremely low rate, what happens when they leave? Further, do they have the level of talent required to take work off your plate?  If you hire two people who need a great deal of handholding, is the company truly better off?

As a startup, is your budget a critical part of your growth plan? Absolutely. Regardless, you need to get the right people on the bus if the plan is to move forward.

5. Putting the cart before the horse. 

This business mistake seems almost literal. I have seen founders talk about and put a great deal of effort into the “next stage” initiatives before they even have a solid MVP.

Is it important to think about the long-term viability of a company?


However, putting the time and effort into it before there is a clear understanding of market acceptance is a waste of time and resources. I have seen companies stall before they even start because they were so focused on what was next.

That said, it is important to document these ideas. As the business begins to gain traction, you’ll want to make sure that you have access to these ideas as some form of them may be viable, if not the original idea.

Bonus: Not putting enough money/effort into marketing or not understanding marketing. 

While this is a component of how to get more business, some companies will put their effort directly into sales and networking. Both of which are great, but not sufficient on their own.

The challenge with sales and networking is that you can only reach the people who are directly in front of you, whereas marketing attracts completely new customers.

The increased reach and visibility will also help drive the right traffic to your business. If you are effectively targeting the right traffic, your marketing becomes more efficient and the cost of acquiring new customers will decrease.

Skip the Business Mistakes Altogether

Thankfully, you do not have to learn these business lessons the hard way. Just as tech startups have a higher chance of success when they have gone through an accelerator or incubator, your business has a higher chance of success when it gets the right support.

If you are serious about building an extraordinary company, tap into Aepiphanni’s powerful managed services. Our marketing team will help you with strategy, creative, and execution to produce and deliver an effective marketing program that gets results.

But we won’t stop there. We will also help you jump over the business growth hurdle by helping you gain control of your finances to successfully grow your company.

We can also help you grow your team, recruiting talent for your startup as direct hires or part of our BPO team. This will give you the flexibility and opportunity to find the right talent for your firm.

Commit to your company’s sustainable growth.

Learn more about how we can help your company defy the odds and become part of the 10% of successful tech startups with our support during a complimentary consultation.


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