Startup Lessons You Don’t Want To Learn The Hard Way

Photo by Thomas Drouault on Unsplash

On average, about 50% of new businesses close their doors only 5 years after incorporation. The notion provides some comfort when compared to the usual adage that half of newfound companies fail during their first year, but the fact still stands that a company is most vulnerable during the first few years of its life-cycle. Startups, the up-and-comers of the corporate world, are more likely to thread on dangerous ground as a result of adopting novel, but often unproven, management, production and communication methods. It’s a high-risk, high-reward kind of scenario, where doing things differently can potentially lead to spectacular results, but also disastrous failures.

Nevertheless, there are certain steps that every business can take, including startups, to reduce risk of going under prematurely. Striving for novelty and experimentation is important, but doing so on solid foundations is much more likely to produce results in the long-run. Getting your basics right will go a long way, and this includes avoiding rookie mistakes. To find out what those are, and how best to overcome them, take a look at the rest of this article.

Inadequate Work Conditions

Startups come in all shapes and sizes. What they all have in common however is a need to for adequate office space. Running an operation from your bedroom can work for a while for some companies, but down the line moving to an office becomes mandatory. This is due to several reasons. First, most apartments offer limited space for the necessary office equipment, which will quickly lead to overcrowding. Second, having a home office muddles the line between work and leisure hours, which can be psychologically destabilizing. Finally, work-related data and equipment needs adequate protection, which is something a home environment can’t afford without compromising comfort.

Mismanaging Finances

The quickest way to ruin a company is by staunching the flow of finance within it. Mismanaging money leads to production slowdowns, late salaries, defaulting on debt, and bankruptcy among other things. There are many ways in which finances can become an issue within a company. Overzealous profit reinvesting can anger workers who are counting on short-term returns. Spending on needles luxuries can back-fire after the “wow” factor associated with them starts to dissipate. General financial incompetence can lead to bad bookkeeping, which is a quick ticket to a government inspection. For the reasons mentioned, competent accounting firms should be hired to ensure your finances remain on track. Additionally, there are plenty of resources online to get you up-to-speed with accounting basics, so you can be prepared for any potential problem that might arise.

Running Second-Rate Tech

Nothing gets deprecated quite as fast as technology. Conversely, nothing but technology innovates at such a staggering rate. This can present a problem for fledgling companies with a limited tech budget. Buying equipment which will soon become obsolete, or overspending on cutting-edge tech which few people are still using are both common mistakes that startups tend to make. When it comes to technology, the best advice to follow is finding the right tools for the job. Carefully consider the kind of work you will be doing in the foreseeable future, and acquire all necessary equipment for the task at hand.

Neglecting Marketing

Products no longer sell themselves, and it is doubtful if they ever did. In other words, in order to do business, you need some form of promotion in order to reach your target audience. The problem is, there are so many approaches to marketing, that it becomes hard to distinguish what works and what doesn’t. Some experts are proclaiming the end of traditional advertising in the wake of digital marketing, others decrying the latter as a scam and suggesting to stick with tried-and-true methods. The truth is, there isn’t one marketing strategy to rule them all. Each company needs to find the specific means of promoting themselves, and to do so they need to consider a whole series of factors, most notably their budget and target audience.

Missing Deadlines

Rookie companies are often eager to deliver more than they originally promised to their investors and owners. Unfortunately, over-promising but under-delivering seems to be the standard when it comes to startups. Often this is due to a cascade of missing deadlines, where one instances of being late creates a bottle-neck which causes further delays. For this reason, always being up-to-speed with deadlines is imperative for smaller companies. Whether through individual diligence, the use of project management software such as ActiveCollab or Basecamp, or careful planning, keeping on schedule is anything but optional.


There are many things that can go wrong when creating a startup, some of which we have outlined above. Fortunately, there are measures to address most of them, provided you are willing to do some research on the subject. A company that is well acquainted with what can go wrong is much more likely to make it past the dreaded 5-year mark.

Author bio: Steven Clarke is business consultant that likes to write about his ideas and share them with the world. He is a regular contributor to several websites. When not working on new projects, Steven likes to spend time with his daughter in the great outdoors.





About Guest Author

Guest Authors Welcomed! Please visit to learn more about how to get published on our site.


  1. Damir Radovic on March 26, 2018 at 5:39 am

    You’re right Steven, everything you said is true. But your conclusion says it all – a great preparation can save you sooo many headaches, that will ultimately lead to failure.