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Read time: 10 minutes

In today’s issue, I’m going to show you 5 common startup mistakes founders make and how avoiding them will boost your impact and success as an impact startup.

To maximise your positive impact in the world by making your business more successful.

Most first-time founders fall into the same pitfalls thousands fell into before them. And often it costs them more than money and time but drives them out of business completely. You want to make sure to not waste any of your scarce resources through these mistakes. Or at least notice them as early as possible when they are happening.

Mistake #1: Not Learning From Other Founders’ Mistakes

The most important mistake, and the reason I wrote this issue, is not learning from other founders’ mistakes. When I founded my first cleantech startup with my co-founders, we ran into every single mistake one could make as a first-time founder. But it wasn’t until after we shut down the company, that we realised there are dozens of articles on first-time founder mistakes – and we never read any of them before founding and shutting down our company.

How often did you google “how to do X” or “what are the best ways to do Y”? For sure I do it all the time. And learning and reading about best practices is a fantastic way to give you some framework to operate with. It helps you getting structured in your work or do things you never did before. But usually, these articles fail at showing what’s most important to get right. They don’t focus on preventing failure and how to deal with potential pitfalls.

And although we all know that the best learnings come from trying out things, and learning from the mistakes on the way, we often fail to use the knowledge from other peoples’ mistakes upfront.

Whether it’s asking for advice from experienced founders right from the beginning or seeking out others who might have worked or still work in the same field. There are many people who are willing to share their fuck-up stories and learnings from earlier endeavours. We just must listen.

Solution: Next time when you google “How to do X”, try also googling “Mistakes when doing X”. You are going to be surprised how many valuable learning you can take out of the results.

Mistake #2: Focusing More on Impact Than on Business Feasibility

As impact-oriented entrepreneurs we want our business to create a positive impact in the world. For me, it was most important to contribute to solving climate change and accelerating the transition to a sustainable future. For you, it might be improving sanitary systems in the poorest areas, cleaning plastic from the oceans, restoring reefs, or something similarly awesome.

And while it is great that we make positive impact a necessary condition for our startups, impact founders often get blinded by the impact they want to achieve. I can’t believe I’m saying this, but while it’s important to have a positive impact, it is more important to focus on making money with your business than on how much impact you have. Because the simple truth it:

If your business doesn’t make enough money to sustain itself, it won’t have any lasting impact at all.

Are you bootstrapping your business? Then you know that any resources you want to spend on creating an impact must be earned first. Therefore, you need to create a profit than can be reinvested into growing your impact.

Are you looking for impact-oriented investors to invest in your company? Awesome! But remember, they don’t invest on you based on your impact. They take it into account, sure. But if your business doesn’t represent an opportunity to make a 5-10x multiple on their investment, they won’t even look at your impact.

Solution: If you really want your business to have a positive impact on the world, you need to make sure that it can live on its own. You must have paying customers from the start and a market that is big enough for you and your competitors or fellow impact entrepreneurs to coexist.

Mistake #3: Starting With a Solution Looking for a Problem

At this point, some of you might be thinking “ok, how can I make some money with this idea I have”. And from my own experience, I can tell you: Throw it away, forget it, and start looking for a real problem your target customers have.

When I met my first co-founder, we participated in an innovation competition. Together with some fellow energy nerds, we had the idea of creating a gadget which shows you how green the electricity in the grid is now. We thought the idea was cool, and it was fun to work on it. We even won the innovation challenge with our team. After the competition, we continued to work on it as a side project. And a couple of months later, we decided to turn our idea into a startup. We then went through a pre-incubator and applied for a startup founder scholarship.

Just then, after spending 9 months of developing our idea further, we hit a wall.

The scholarship was denied because our business idea had no business behind it. Which problem were we solving? No-one wakes up in the morning and wonders how green their electricity is now before making themselves a coffee. Either they don’t care at all, or they might care, but then probably have a green tariff anyway.

We had produced some elaborate business model, which was built like a house of cards on way too many unvalidated assumptions. It just needed one critical voice and it collapsed.

You want to build a business. Therefore, you want people, your customers, to buy a product from you which creates value for them. You must solve a problem they face, and it should be business-critical and urgent. The best problems you can solve are a real pain in the ass for your customers, and they must face them regularly in their day-to-day work or life. You don’t want to be a nice-to-have. So, if you are unsure whether your product idea solves a problem for anyone, it doesn’t.

Solution: Stop looking for a problem for your solution. Start talking to your target customers, learn about their daily struggles and challenges. If you want to be able to provide your customers with additional value, you need to know their pain points and problems.

Mistake #4: Not Knowing Who Your Customers Are

If you don’t know how to find your first customer or if you don’t know who to talk to after mistake #3, you might have a bigger problem. You might be missing a target customer audience in the first place.

If you cannot specify who your customers and users are, you will fail. This is quite simple, because without knowing whose problems you want to solve, you cannot identify their problems at all. And it goes beyond that. Your customers must be the reason you are creating this business. If you don’t care deeply about helping your customers, you will not have the energy to drive your business forward over the next years. Enabling a better life or more success for them must be something that lets you wake up in the morning, looking forward to doing today’s work.

Imagine this: If you are a wedding planner, you need to care deeply about making a couple as happy as possible at their wedding. If you want to create a market-analysis SaaS for renewable energy developers, you must care deeply about making renewable energy developers more successful in their job.

When you found a startup with the intention to grow it, get some investments, and exit in the end, you might face at least 10 years of working on this startup – if you are successful. If you are planning to keep the business instead of selling it, it might be longer.

Either way, you want to make sure that you burn for solving your customers’ problems every day – okay, not every day, but most days. 😄 And when you burn for someone’s problems, you know at least one person in your target audience.

Solution: Find a tribe of people you deeply care about. Talk to them. Talk to their peers. Try to find common patterns in their problems and daily struggles. If there is no overlap between the people you talk to, they belong into separate customer segments. Make sure that you understand who your customers and users are, where they work, how old they are, how their day-to-day work looks like. Just then will you be able to develop an understanding of their critical problems and pain points.

Mistake #5: Not Having a Go-To-Market Plan

Most first-time founders make this mistake, and impact entrepreneurs are no exception – quite the opposite. Solving a problem and building a solution is fun. Whether it’s building features for your renewable energy developer SaaS or tweaking your direct air capture machine – working on the product is always a great feeling.

But product-focused founders often believe that the quality of the product just must reach a certain level to automatically attract potential users. “Build it and they will come”, as people often call it, is one of the largest pitfalls for any startup. Your product can solve whatever problem, but if you are not selling it, because no-one knows about it, it’s worth nothing. And believing too much in your product because it has a positive impact on the world can make it even more difficult not to fall into this pitfall.

Most of your potential prospects will not show up on your door one day and shower you with money. You must develop a specific marketing plan on how to reach them. And to convert them into leads, no matter where they are on their customer journey.

There are 5 categories of potential customers according to Gene Schwartz’ all-time bestseller “Breakthrough Advertising”:

  • The Most Aware: These know what problem they have, what solutions there are, and that you provide what they need. These are the ones who “will come when you build it”, but their group is the smallest of the five.
  • Product-Aware: These prospects know their problem, the solution, and potential products which provide this solution including yours. They are just unsure whether yours is the right choice.
  • Solution-Aware: Customers who know their problem and approaches to solve it. However, they are not aware that there are products available which provide this solution.
  • Problem-Aware: These people feel the pain of a problem they have, but they are completely unaware that there are solutions to their problem.
  • Completely Unaware: These people don’t even know that they have a problem. They will not buy your product, no matter how many features you’ve built into it.

Solution: You need to develop a marketing strategy for each group you want to target. And it needs to include at least:

  • how and where to reach them in the first place
  • which key resources & partners you will need to drive your prospects to your product
  • how to convince a prospect that your product is the solution to their problems,

TL;DR

  • Learn from the mistakes of the millions of founders before you.
  • When founding a startup – impact or not – you must focus on your customers and the business side of things.
  • Become the expert for your target customers’ problems. Understand how they work and how to reach them. Don’t try to market your idea as solution to some problem. Burn for your customers and try to provide solutions to their critical problems.
  • Do marketing for your product – even before you build it. It will help you validating your ideas and building relationships with the customers you want to serve.

See you next week. 😉

Whenever you are ready, subscribe to my newsletter or follow me on LinkedIn to never miss my weekly tips on how to increase your impact and success as an impact entrepreneur.


Photo by Ian Kim on Unsplash

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Hey 🙂 I'm Lars

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