5 Mistakes Startups and SMEs Must Avoid

Business Development

It is no longer news how many businesses/startups fail within their first year or first five years of existence. Some are based on mistakes made by these startups and SMEs, while others are due to factors beyond their control.

In this article, we will be highlighting some reoccurring mistakes startups and SMEs must avoid in building profitable and sustainable businesses.

Top Mistakes Startups and SMEs Must Avoid

Building in Isolation

Top on the list of mistakes made by businesses is the mistake of building in isolation. The rule of thumb in venture building is that every business/solution is to meet the need of a particular group of people (market). 

Despite this, time and again, many entrepreneurs keep making the mistake of building a solution or starting a business simply based on guts feel and not on the demands of their market. Thereby, leading to the building of businesses and solutions that consumers don’t need or that do not solve the real pain points of these users. Therefore costing businesses their time, resources, and ultimately their survival.

When starting a business, begin with the problem you want to solve and for whom you are solving these problems. Then engage the affected demographics through user research to fully understand their problem and how best to solve it.

Rigidness (Not Pivoting)

Startups and SMEs

I know many times the need to start a business or build a solution is born from great ideas erupting from eureka moments, and sometimes this is the basis of another mistake many startups and SMEs make, the mistake of staying rigid and not wanting to pivot even when insights from their target audience and the market suggests otherwise simply because they believe their idea is bulletproof.

Obstinacy is a big problem for entrepreneurs. Building a business, especially a startup is largely hinged on flexibility. You have to listen to your market, understand their needs, study trends, and pivot when necessary.

Never get too attached to your original plan because it is probably wrong for your market. Most successful startups end up doing something different than they originally intended — often so different that it doesn’t even seem like the same company. For example; Instagram began as Burbn, a check-in app that included gaming elements from Mafia Wars and a photo element but had to strip its solution to just the photo element. Twitter formerly called Odeo began as a network where people could find and subscribe to podcasts. The company decided to make a drastic change and run with the idea of a status-updating micro-blogging platform.

“You have to be prepared to see the better idea when it arrives. And the hardest part of that is often discarding your old idea.” Paul Graham.

Business Model

Let’s begin by defining this concept. A business model describes the rationale of how a business to creates, delivers, and captures value for its customers and itself. 

Reiterating the importance of engaging and understanding your market, how do you build, capture, and deliver value for a market you do not understand? 

Due to the lack of a proper understanding of their customers/market, many businesses/startups do not know the best way to create value for their target audience or capture value (revenue) from them. They do not know what channel to engage them on nor do they know a pricing model to deploy. All of which are important elements of every business model.

Not having a clear and solid business model for a business is a good recipe for the failure of any startup/business, and a great way to avoid this mistake is by designing your business model based on the insights gathered from your target market.


This is an understandable concept that is very common with startups and small businesses because these businesses do not enjoy the benefits many large companies have to hire staff. Notwithstanding, as an entrepreneur looking to build and grow a business, you have to sort help in areas that are not your expertise.

This help can be by getting a co-founder who has skills that complement core areas of your business where you may be lacking, by hiring a small team of individuals who understands and can relate to your business vision and goals, or by outsourcing some of your tasks to professional business solutions companies like Effe Towers who can help with business development services, digital marketing, web/software design and development, product design and management, etc.


Mistakes Startups and SMEs must avoid

For many founders and business owners, this is one of the scariest exercises because it borders around trust and vulnerability.

Hiring has caused many good startups a lot, and because there is no silver bullet for it, it is one many businesses keep making. Mistakes in hiring can show up on different fronts;

– Hiring too quickly weakens a business by limiting its cash flow which, in turn, can prevent the funds from being available to buy other (potentially more useful) resources such as training courses and better materials.

– Hiring employees based on their pay grade rather than their expertise, experience or attitude is a sure way to drown your business.

– Hiring the wrong set of individuals who are not qualified for the job but claim that they are. 

To manage all of these, it is advisable you only hire for core positions needed by your business, and also get help from professional human resource managers before hiring.

In Conclusion

The 5 mistakes outlined in this article do not in any way suggest that there are no other factors that could inadvertently affect the health and growth of a business, but avoiding these 5 major mistakes is a good place to start in building and running a successful business. 

While all of the mistakes mentioned above are important, avoid all cost mistakes number one. Do not build in isolation, build what solutions that meet the needs of your customers. And as an entrepreneur, you can outsource and seek help in areas that are not necessarily your strong suit from professionals like Effe Towers. 

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