We have had a series of articles about what entrepreneurs should do and why they should. But in this article, I need to focus on the five specific mistakes that startups make. Of course, there are hundreds of errors to avoid, but African startups need to note these five.
They are drawn from my experience and informal discussions with other entrepreneurs and business consultants.
Launching your business before proper registration and legal setup
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A few entrepreneurs have in the past made the mistake of rushing to start a business without fulfilling the appropriate legal requirements. This may be in a bid to save costs or sometimes to try out the market and see if it would succeed before going the legal route.
This is a major mistake to avoid, and its consequences are dire. If you do not register your business, pick up the correct entity or protect your intellectual property before launching out, I can assure you that it will cost valuable time and money to correct it when things go wrong. You can imagine gaining market traction only to discover that another person is already trading with your business name elsewhere.
The lawyers can fill us in on this in the comment section.
I am trying to do everything myself.
You can go fast if you go alone, but if you intend to go far, you cannot go alone. Try to get trustworthy partners and advisors to handle some part of the business, or give you constant feedback. This will help smoothen your processes.
Hiring too soon
Do you happen to remember our earlier article on Team hiring? Another mistake to avoid in this same light is hiring too soon. When is it okay to outsource a task to a freelancer, and when is it better to have a part-time or full-time staff or get a paid intern? I would also like to make sure you are onboarding new talents when needed.
Like the founder of Redclay Advisory, Adun Okupe, recently said in a radio interview on Classic FM, the 5-year-old company works with four core team members and pulls in from a network of consultants and advisors when the need arises. This is an excellent model to adopt, too, only hiring full-time staff when you need them.
Avoiding legal contracts and agreements
It may be an African factor to trust in the personal relationship you have built with people, but it is always safer to have everything in black and white. If you are launching or running a startup, you can avoid gentlemanly agreements. Let everything be spelled out in black and white. It will not only save your business, but it will also save your relationships.
Undervaluing or under-pricing your product
As an entrepreneur, you might conclude that it will help you steal a significant market share if your prices exceed the competition. But my take on this is that you avoid this pitfall. It is not sustainable.
If you do proper research, you will find that several businesses rode into the market on an extensive discount campaign and recorded huge sales, only for their sales to plummet as soon as the discount ended.
Focus instead on the value your product offers, and don’t stop ringing this information until you get it stuck in your audience’s subconscious memory.
We can continue this discussion soon. What do you say?