Starting a business is exciting, but even the most promising startups can falter by making avoidable mistakes. We asked our CEO, Tamas Safranyos, to share valuable lessons for startups based on years of hands-on experience leading and growing businesses.

Misunderstanding the Market

#1 Failing to spend enough time researching the business idea to see if it's viable
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The primary reason 9 out of 10 entrepreneurs fail is not due to funding or team but because their core idea isn't viable. Despite their talent and efforts, inadequate upfront research leads to incorrect execution.

#2 Miscalculating market size, timing, ease of entry, and potential market share
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‍New entrepreneurs often overestimate market demand out of excitement. While they project selling to 2% of a large market, in reality, most products capture less than 1% of their target audience.

#3 Underestimating financial requirements and timing
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‍Based on flawed sales projections, startups overcommit to expenses like office space and staffing, quickly leading to financial strain when those projections aren't met.

Poor Management Decisions

#4 Overprojecting sales volume and timing
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After misjudging the market size, startups overly estimate their share. While targeting millions, the number of viable prospects is much smaller, making sales targets unattainable.

#5 Making cost projections that are too low
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Startups often underestimate costs, partly due to overestimating sales. Unforeseen factors further inflate expenses, resulting in reduced profit margins.

#6 Hiring too many people and spending too much on offices and facilities
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Overhiring and overspending on facilities lead to high costs and overhead. They all grow out of that first mistake: failing to research the size and viability of the opportunity.

#7 Lacking a contingency plan for a shortfall in expectations
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Without a contingency plan, startups are unprepared for unforeseen challenges, like fluctuating bank rates or shipping issues. Many entrepreneurs mistakenly rely on optimism instead of planning for potential setbacks.

#8 Bringing in unnecessary partners
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Involving too many partners can dilute ownership. While some partners are essential for funding, adding friends without strategic value is a common mistake. Partnerships should be based on strategic advantages.

#9 Hiring for convenience rather than skill requirements
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Hiring based on convenience can lead to mismatched skills. In initial businesses, hiring relatives and friends may seem easy, but it often results in inefficiencies. It's crucial to prioritize skills and versatility over-familiarity.

#10 Neglecting to manage the entire company as a whole
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Over-focusing on minor business aspects can skew perspective. Many leaders get consumed by small parts, neglecting the company's overall vision. It's essential to maintain a holistic view and align decisions with the bigger picture.

#11 Accepting that it's "not possible" too easily rather than finding a way
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Easily accepting the "impossible" hinders innovation. Entrepreneurs must challenge such beliefs. While experts might see limitations, a true innovator seeks alternative solutions.

#12 Focusing too much on sales volume and company size rather than profit
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Prioritizing company size and sales over profit is misguided. Many entrepreneurs boast about business scale, but sustainable success requires focusing on profitability. Investors value smart business decisions over sheer growth.

#13 Seeking confirmation of your actions rather than seeking the truth
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Valuing affirmation over truth is misguided. Many seek validation from peers and family, ignoring honest feedback. Yet, true success comes from recognizing and addressing genuine critiques, prioritizing truth over simple praise.

#14 Lacking simplicity and focus
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Diluting focus blocks success. Entrepreneurs often chase multiple avenues, neglecting their core vision. Spreading oneself thin across varied markets can lead to none being served effectively. It's essential to prioritize and simplify objectives.

Lack of vision

#15 Lacking clarity of your long-term goals and business purposes
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Clear long-term goals are essential. While these goals can evolve, having a distinct target is crucial. The success of a product or venture depends on your broader goal, be it building a billion-dollar company or a smaller family-run business. Understanding your business's purpose ensures better decision-making.

#16 Lacking focus and identity
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Maintaining focus is crucial for a company's identity. A company should avoid chasing multiple targets, which can dilute its core essence. For example, just because a business sells to a big retailer doesn't mean it should diversify into unrelated areas. A company gains strength from a clear and concentrated identity.

#17 Lacking an exit strategy
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Have a clear exit strategy for your business. For example, planning to run a business for two years due to competitive concerns means avoiding long-term commitments and monitoring the market and inventories after the first year.