6 major mistakes startups that lead to failure, and 3 Helpful Hints

It is believed that the main problem that hinders the development of start-ups - is the lack of funding. Especially acute question of finding the investment costs at social startups that do not have the capital generation capacity, in principle, clear entry strategies as other startups but different lower margin and less potential for scaling.

To solve this problem and raising finance in our country there are many grant programs and so-called incubators, accelerators, which are aimed precisely at helping budding entrepreneur to present his project and, if lucky, rip awaited jackpot.

We understand the basic errors and mistakes that startups when looking for investors, and talked about how to avoid them.

Basic errors startups

1. We need to do a startup in the IT, as it is now in the trend

Only if your technology is indeed a breakthrough, and you find applications of it. There are too many HYIP around everything related to IT:

artificial Intelligence, Virtual reality, robotics, cryptocurrency. These industries have attracted much attention and money, because they promise a rapid return on investment. Here the company are sold with a multiplier of 10. And if they come to the US stock exchange NASDAQ, it has a measure of 20: they became public, have grown to a certain level, they did not die on the way.

In general, the area is really a trend, but too many entrepreneurs want to develop in it. Your project is in danger of getting lost on the background of a dozen other similar products.

What to do to stand out? You can try to integrate the new technology into the usual services. For example, to attach technologies Big Data Network hairdressers and collect data about the visitors: the hair color, the number of dandruff, and so on. This information then can be sold to a major medical companies or producers of cosmetics. So you strizhote people and additionally collect a database at the same time.

The second option - to find out for what purpose the money now give local and foreign funds, the government of your city, and to open a startup in this area.

The third vector - seek out what customers need any other business, if it is B2B. What are the problems to be solved? This approach is based on a study of customer experience.

All the time there are new markets and opportunities, and then they disappear and are replaced by others. We must keep abreast.

2. To start-earned enough good ideas

Unfortunately, one idea is not enough: any business - it is a huge effort and investment. You have to become an entrepreneur. This concept includes, among other things, very attentive to finance.

Among the startups and budding entrepreneurs a lot of people, his keen idea. But often it is combined with absolute illiteracy in business matters and unwillingness to engage in trivial things such as accounting finance hiring employees, Compliance with labor laws. So, it's necessary to learn and to love, otherwise inevitable collapse.

3. Grant getting enough to enter the international level

Aspiring entrepreneurs always want to conquer the world, but often do not calculate their strength. It would be very simple if the grant automatically give access to international markets, but it is not necessary, especially if we are talking about a local grant.

If you get a grant from an international organization, it can help reach the international level, because you have to communicate with people from abroad, you will write about in the foreign media. But ultimately, it all depends on your activity. It is obvious that if you have received a grant from a foreign company, you have a communication channel with the same partner. Your task - this channel is to expand and develop relationship.

4. Be a clear allocation plan is not necessarily

When you are applying for funding, you must have a clear plan for spending money. This idea may seem obvious, but there are cases where young entrepreneurs at a meeting with investors voiced sum of one million dollars. And when they are asked to specify what they will spend the money, there is no answer.

To avoid this situation, you must have particular goalsIn order to achieve that you need and investment. It is clear that some of the money will be spent on operating costs - staff salaries and so on, but it must somehow be linked to the team's achievements: for example, for six months should be introduced here are in the product function.

Another "obvious", but important rule: a financial plan should clearly be observed. You must show that the money is spent exactly as intended, rather than the high-class cars purchase for personal use. Otherwise, you can claim to be very serious, up to lawsuits. More on this in the next paragraph.

5. After receiving the money, you can relax

Among the startups there is a popular joke: the first money given 3F - family, friends, fools (family, friends and fools). If these sources of funding were not enough (or almost always), entrepreneurs are starting to look for investors, business angels, funders, go to kraudfandingovye platform. Often, however, the grant becomes a fixed idea, and this is also the danger lies.

Get a grant is really very good for a start. And above all, not because it is financial assistance, but because it is a great opportunity for PR, which also provides access to the customer base. Through grants entrepreneur enters into a new circle of acquaintances and ties helpful business contacts. Startup actually gets free promotion, he has a chance to "come out of the shadows." Industry media readily cover the scope of grant and are closely monitoring the success of the company.

But you got the money, and what's next? Many startups then relax. But it is important to understand: incubators, accelerators, investors and funds allocate money only for specific purposes. You can not get the funds simply and spend it at their discretion. If the start-up said that he needed money to buy equipment, then it will have to buy the equipment and then documented report on their actions.

The entrepreneur must be a concrete business plan, which he clearly prescribes how much he needed the money and for what purposes. To this must be taken seriously.

It's worth noting one more thing: it is often the case that the entrepreneur has to pay a certain percentage of the amount received. Typically, this is 10-20%, so it is necessary to carefully examine the requirements of grants and incubators.

6. Promotion in the media after the grant will go a long

Yes, the distribution of grants is widely covered in the media. But do not hope that we can now rest on our laurels. On the contrary, you need to do everything to those who write about the grant fund, told about you. In addition, of course, we have to themselves and share the news: on your site, blog, social networks. Well, if it is well thought-out PR-campaign specifically prescribed steps: today we talk about this tomorrow on the other.

Note: you need to tell us not only that you have received a grant, but also about how you expend.

For example, you have received a grant from the city government to care for stray animals. You can all half a year (depending on how much grant is calculated) to post photos on social networks: "Look how cool the cells for dogs we have bought. Now well-known blogger came to paint flowers on our booth. And yet we have a competition: who is more creative will paint our fence. " At each stage, you can create a PR-motive.

If you have a stopper in the form of their own modesty, then let me quote the famous phrase: "Modesty - a path into the unknown." You will not be able to develop your business, if you currently have paved the way in the dark. If serious people give you money for the project, therefore, in their opinion, it is important and interesting, it's worth telling.

A few tips from an experienced startups

1. Select an individual that he was involved in Grants

Submission of documents for a grant - not an easy task. We entrust this task the individual, which is filing for every grant has spent more than a month of hard work. On this basis, calculate the timing, so as not to postpone everything for the last day, when you already do not exactly have time to make quality presentation project.

2. Talk about your innovation business language

At meetings of the grant committee usually present experienced people: investors, engineers, experts, tops of large corporations. However, despite the high level of knowledge, they can not be experts in your field. Therefore, your application and presentation should very clearly and intelligibly explain what problem you solve your product, how are you going to monetize the technology, giving an understanding of the competitive field.

Your words must be understandable to a broad range of people, but it does not turn into an artistic work. There appears another common mistake startups, according to the vice-president of grant programs Expo Live Yusuf Kayresa - is feeding on a grant application to the raw, undeveloped projects, which do not solve any particular problem. You must first clearly understand themselves, what is the main value of your project. And to be able to clearly and in detail describe it, without water.

3. Set clear KPI

They will be yours coordinates in difficult navigating the oceans of the market. And they eventually have to determine the success of the project.