Fear of failure has nipped many a start-up in the bud. Small wonder, then, that Silicon Valley’s mantra of ‘fail fast, fail better’ has found wide-spread favour among entrepreneurs; by putting a positive spin on failure. But according to a Forbes article, this adage might well be just lip service. Most entrepreneurs are, in fact, terrified of failing and writing away their investors’ hard earned money (and trust) in the process.
While failure cannot be avoided entirely (and could also prove to be a stepping stone for greater success), wisdom dictates that we learn from the mistakes of our predecessors and avoid making the same ones. Here are 5 commonly made mistakes, culled from the experiences of various entrepreneurs in the travel industry.
1) Failing to create a water-tight business model
Many entrepreneurs get so caught up in the fuzz of ‘inspiration-first’, that they fail to establish a robust monetisation model for their product, believing money will follow inspiration. According to industry veterans, this is a recipe for disaster. Consumers may not beat a path to your door just because your product is inspiring or interesting, especially in the long term. Hammering out your business model and outlining a realistic cost of customer acquisition is crucial before launching a start-up.
2) Not offering anything different, or better
At last count, there were more than 200 start-ups (as estimated by traxcn.com) in the online travel domain, not including the heavy-weight offline players. To make any headway in this crowded industry, your product would have to fulfil an unmet need of consumers, or offer something way better than what is currently available in the market. In his interview with the Economic Times, Michael Lyngdoh, co-founder of Tripoto, has voiced his conviction that this field still has a lot of room for improvement, as no player has managed to close the travel loop fully. The Economic Times article has further highlighted niche segments such as last minute bookings, metasearch, tech providers to hotels, personalised travel packages, alternate stays and budget hotels, as relatively unoccupied areas to focus on.
However, there is a flip side to this. Many entrepreneurs concentrate their energies on a niche, just to avoid the fiercely competed segments. While this strategy may prove lucky, it isn’t the go-to formula for success. If we look closely at the genesis of flourishing start-ups, we can identify a common trend – they’ve all come into place because their founders identified and capitalized on an unsolved problem of consumers.
3) Being under-capitalized
Your start-up is like an airplane. It needs a decent stretch of runway (read money) to take-off smoothly, or it will inevitably nosedive. Statistics cite shortage of funds as the number 2 reason for start-up failure. To get a fair idea of the capital investment needed, make an honest, detailed account of all your expenses, including marketing budgets, and secrete away sufficient cash (around 5%-20% of your entire budget) for a rainy day.
4) Being too invested in your original plan
Every entrepreneur needs to be fired up about their idea; they cannot be entrepreneurs otherwise. However, resting on the other end of the scale, where you are completely consumed by your idea and blind to the inputs of others – is no great shakes either. Start-ups would do better to follow the trail where it leads, and more often than not, it leads to entirely new horizons not previously envisioned.
Take Instagram for example. This immensely popular app was originally Burbn – a multi-faceted, check-in project, similar to FourSquare. Burbn had many complicated features, one of which was a photo-sharing app. But following inputs and behavioural trends of consumers, the founders trimmed down the features to just the popular photo-sharing one, and re-named it as Instagram. Sometimes, listening to others, especially your customers, can make or break your business.
5) Not working with an A-team
Have you heard of the successful one-man company? You couldn’t have, because it doesn’t exist. A successful start-up depends on a team of highly-skilled and deeply-invested people, who put their heads together to make magic happen. Hiring the wrong resources, either from ignorance or due to lack of funds, can prove to be a start-up’s undoing. Your product is only as good as the people working on it, so make sure your key members are the best money can buy.
For some founders, hiring for attitude rather than just skill is a game-changing factor. Elon Musk is said to have told Business Insider that his biggest mistake was, “Weighing too much on someone’s talent and not someone’s personality. I think it matters whether someone has a good heart.”
Jim Collins, the famous American business consultant has summed it up quite succinctly in his quote – “Great vision without great people is irrelevant.”
What mistakes have you made, that you wish you hadn’t, while launching your start-up? Weigh in with your advice in the comment section below.
Established in 2015, deAsra helps individuals become self-employed by offering them end-to-end support across all stages of their business lifecycle, including bank loans, compliance support, supply chain guidance, recruitment advice and more. In the next 5 years, deAsra seeks to enable 25,000 self-employed businesses.