Startups - Common Mistakes Founders Make

While there are a million ways that a business can fail, we found that there are common mistakes made by Founders that account for most closed businesses.


12/22/20237 min read

Startups - Mistakes
Startups - Mistakes

Starting a new business can be scary. Leaving behind the security of a nine-to-five job for the opportunity to run your own company can be “the dream” or “the nightmare,” depending on how prepared you may be. We have helped countless startups navigate those treacherous waters to achieve funding, growth, and stability.

We thought it might be helpful to write a blog series about some of the lessons and best practices that can make or break your business.

This series is for that maverick who left a 40-hour work week to work 112 hours or more for less pay and more aggravation. Having done it several times myself, I wouldn’t trade it for the world. There is nothing as fun, or exhilarating, as working for a startup, particularly if it is yours.

We will start this series with a number of mistakes, or assumptions, that most Founders have, which can cripple your growth or kill your business. In this series, we will share the key marketing initiatives that will jump-start your business, and we will discuss how to fund the new organization without having to sacrifice too much equity or control. We will share how to staff and train your Sales and Customer Support teams.

Since every business model is different, much of what we write must, at times, be generic. Since most of the startups we see are either B2B SaaS or B2C eCommerce, we will make specific references to both of these models. We have noticed that Founders in these groups often make these type of mistakes.

How Does Prevail Marketing Have Startup Expertise?

We normally abhor using these blogs for anything that smacks of an advertisement for our agency. We think, however, that it is important you understand the background and understanding that we bring to the startup space. We have had over 60 startups, that we have helped grow by running their marketing and/or sales efforts. We have been in-house founders, or co-founders, for over eight startups, all with successful exits. We have raised funds for every stage of growth and helped secure successful exits for a number of Founders. The point is, we have the scars, the war stories, and the successes to back up our observations.

The Founders

We know much of what we write in this first blog might offend a number of Founders. We love working with Founders at early-stage companies. Their passion and intensity are unequaled. It is often this single focus drive to success that can make them blind to foundational mistakes, robbing them of their future and company. We take pride in the fact that we will always tell our clients what they need to hear and not necessarily what they want to hear. We follow the same approach with our blogs

Lack of Market and Competitor Research – Many Founders, particularly in the B2B SaaS industry, are engineers or developers who have created their product out of whole cloth. They have spent time investigating the industry and believe that they have a unique solution that everybody will need and want. The amount of research they have done is just the tip of the iceberg of what they need to do.

One of the most common mistakes startups make is failing to conduct thorough market research. Understanding the target audience, analyzing competitors, and identifying market trends is crucial for creating a successful business strategy. If you want to be successful, you have to know the industry and competitors better than anybody else. Without proper research, startups risk developing products or services that do not meet market demands or fail to differentiate themselves from competitors. By seeking the expertise of marketing professionals, founders can gain valuable insights and make informed decisions, based on market data.

When Prevail Marketing takes on a startup, we conduct that deep dive ourselves. The result is a 175-225 page report that covers every single aspect of the marketplace. We understand how each competitor differentiates themselves, and how they are spending their marketing budgets, and figure out that blue ocean strategy that will allow us to enter and compete against already well-established profitable competitors.

Lack of Customer Knowledge – Probably the biggest mistake that Founders make is thinking they understand how to connect and engage with potential customers. They usually have talked to a couple of dozen people in the industry to create a product that will address their concerns and issues. Frankly, if they have done that much customer research, it is a good start.

Since they do not have existing customers, the typical methodology for buyer persona research is not available. You still need to know what messaging that each person involved in the sales process needs to hear at each stage of the buyer’s journey. You need to understand where they go for information and what may influence their decisions.

How do you develop this information when you do not have a client base? You interview your competitors’ customers as part of an independent research program. You create focus groups to validate what you have learned. By interviewing your competitor's customers, you will gain valuable insights on how to create marketing materials that will lure them away from the competition.

You Don’t Know What You Don’t Know – Elon Musk once said that if you are a startup entering into a marketplace with established competitors, your product must be significantly more valuable than what already exists in the marketplace. He is approaching entering a business the way all developers see the world, if you build a better mousetrap, the world will beat a path to your door. Here is the sad truth; they won’t. I have many occasions where an inferior version of a product becomes the industry standard, and the better products simply cannot get traction.

While the quality and benefits any product provides are paramount to its success, often the differentiating factor for success is marketing. We have taken products that were not “substantially better” and built a foothold then created a business by doing better marketing.

Engineers and developers are brilliant people and can go toe-to-toe with anyone in their chosen field, but they are rather poor marketers. Marketers can take a product and make it look like a must-have possession. What took Apple from a garage startup to a three trillion-dollar company? Yes, they have great products, but in the beginning, they did not have a product that was substantially superior to existing companies in the marketplace. What they did have was a world-class marketer in Steve Jobs who turned Apple into an almost cult-like experience.

If you are a Founder, you need to turn your marketing and sales efforts over to those who have spent a lifetime honing their craft.

Ignoring Customer Feedback – When a Founder creates the product development roadmap, it should not be controlled by any single client's needs or wishes. However, customer feedback is a valuable resource for startups, yet many Founders make the mistake of ignoring or undervaluing it. By actively listening to customer feedback, startups can gain insights into customer preferences, identify areas for improvement, and refine their products or services accordingly. Marketing professionals can help Founders collect and analyze customer feedback through surveys, interviews, and social media monitoring. Incorporating customer feedback into the decision-making process can significantly enhance a startup's chances of success.

Don’t Break the Product – During the beta stages of a company, a Founder is continuously updating and improving his product based on their personal feelings and beliefs. They have a vision for what their company will be and are the sole product visionary. Once you have the product being used by companies as part of their business operations, the Founder can no longer build and change as they wish.

I have seen Founders make arbitrary changes to their product that disrupts the operations of paying clients and causes cancellations. Founders need to take a measured approach, when releasing updates, to ensure they do not cause customer problems by the instability of any product in production.

Product feature updates are necessary and expected, in all industries. For SaaS companies, they are usually far more frequent. In beta, weekly updates are fine, but when the product is being used by customers, a more tempered approach is needed. The ideal pace for the client is eight-week sprints where four weeks are for development, two weeks to properly quality-check the work, and two weeks to provide notice to the customers. Two weeks prior to the changes going live, the customer needs to have:

  • An email with a description of the changes, including the benefits that will result.

  • Screenshots of each new element.

  • Video showing how the new features should be navigated.

  • Webinar walking the clients through the new features and any UX/UI changes.

Poor Financial Management - Financial mismanagement is a common mistake that startups make, often leading to their downfall. Founders need to have a solid understanding of financial management, including budgeting, cash flow management, and forecasting. Seeking guidance from financial experts can help startups create realistic financial projections, develop effective budgeting strategies, and ensure sustainable growth. By managing finances effectively, startups can avoid cash flow problems and make informed financial decisions.

Founders also need to understand how to raise capital for their businesses. I have seen Founders who could not secure any investors, because they did not understand how to position and present their business to the financial community. I have also seen Founders give away too much equity and control by accepting the wrong investors.

Prevail Marketing has helped early-stage companies position themselves to be seen as great candidates for investment. We have created investor decks that have engaged the financial community. We have also used our vast connections to introduce clients to safe investors who do not demand excessive equity or want to control the company.

Ineffective Marketing Strategies – Since most Founders are not marketers, they often lack the understanding of how to quickly scale a business without having a lot of financial resources to throw at the problem. One of the principal reasons, that cause many startups to fail, is the slow pace at which they can scale. Investors don’t want to touch a company that has little or no growth. Eventually, this will drive a business to closure.

Many startups underestimate the significance of implementing effective marketing strategies. Relying solely on word-of-mouth, or organic growth, will not be sufficient to reach the desired customer base. Startups need to invest in various marketing channels, leverage the time, resources, and relationships of third parties, and create campaigns that will resonate with the targeted audience.

While there is no magic formula that applies to every startup, tomorrow’s blog will share the best performing marketing campaigns that every startup needs to consider.


Startups face numerous challenges on their journey to success. However, Founders, by avoiding common mistakes, can significantly improve their chances of survival and growth. By recognizing the importance of seeking help and relying upon the expertise of marketing and sales professionals, Founders can navigate the competitive landscape and position their startups for long-term success.