5 Common Startup Pitfalls and How to Avoid Them

The road to success can be treacherous. Here are some of the biggest traps that keep startups from growing.

Written by Steffen Schebesta
Published on Sep. 21, 2022
5 Common Startup Pitfalls and How to Avoid Them
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In 2011, I founded Newsletter2Go, an email marketing startup based in Germany.

For the first two years, we took small funding of $50,000 EUR and cross-financed the company with external development projects. By 2018, Newsletter2Go had expanded to a little over 80 employees, and I realized it was time to level up and explore more markets. 

This is how Sendinblue, the company where I currently serve as the CEO of North America and VP of Corporate Development, came into the mix. We shared a common goal — to accelerate our growth internationally — and we both had the vision of becoming the leader in digital marketing within the European market. Inevitably, this led Sendinblue to acquire Newsletter2Go in 2019. 

Throughout my journey, I learned valuable lessons about what it takes to successfully build and scale a startup. The road to success can seem difficult, but here are five of the biggest pitfalls to avoid when starting a small business to help you and your startup grow.

5 Common Pitfalls for Startups

  1. Failing to define your company culture early
  2. Picking inadequate tech tools
  3. Misunderstanding the funding landscape
  4. Missing out on marketing
  5. Rushing your idea without validating it

 

Failing to Define Your Company Culture Early

One of the most important things you can do is build a strong company culture from the beginning. A company culture is a collection of shared values and standards that bring life to an organization. 

A culture defines the well-being of the employees and actively aims to improve productivity. In fact, fostering a workplace culture that creates strong bonds among employees can maximize a startup's chance of success. Building company culture is arguably even more important now than in the post-pandemic workplace, as remote teams become dispersed across all parts of the world.  

Externally, your company culture will also have an impact on customer perceptions. Sharing initiatives that define your company culture will establish your brand as authentic and could create customer loyalty. I would recommend you start by brainstorming ideas, and then create a clear (and catchy) outline of what your ideal work environment is like.

 

Picking Inadequate Tech Tools

According to TechRepublic, the number one challenge for startup leaders is choosing the right technology. Despite our increasing reliance on technology to communicate with customers, mediate sales and create brand awareness, many startup founders see buying new technology as an extra expense rather than a foundational element of their company. 

To start, set a realistic budget then consider what your needs are and what technology solutions will help meet those needs. An article by Small Business Bonfire highlights the importance of the technology needed for onboarding and training

Additionally, applications such as Slack, Google Suite and Notion enabled us at Newsletter2Go to effectively communicate, improve collaboration and build a strong company culture. Technology is constantly changing, of course, but it allows businesses to incorporate a more scalable hiring process, automate processes, increase transparency and be compliant with data retention.

Without the right tools, Newsletter2Go would have never become one of the fastest growing startups in Germany.

 

Misunderstanding the Fundraising Landscape

Whether it’s from your savings or investments, the majority of startups die without funding and the power of capital behind them. Pre-seed, seed and series are the three main funding rounds that help startups grow. Similarly, there are three types of investors for startups typically known as angels, venture capital investors and family offices.

Acquiring funding can be difficult at times. In fact, Newsletter2Go only had one investor who we actually found by accident. It just so happened that their company was looking for an email marketing service, and my co-founder and I were in the right place at the right time. Sometimes, it’s just up to fate.

Just a few years later, Sendinblue merged with Newsletter2Go in 2019 and formed the only all-in-one digital marketing platform for SMBs around the world. One year after that, Sendinblue raised $160M in series B funding

The most important piece of advice I can give is to thoroughly understand the industry and raise the right amount of capital for your startup’s success.

More Advice for EntrepreneursForget B2B and B2C. The Real Startup Money Is in B2X.

 

Missing out on Marketing

Marketing is an essential step to your startup’s success. Let’s take Robinhood as an example: The fintech startup was able to obtain one million users prior to launch because the founders developed a sense of urgency by implementing a referral program where users had the option to be put on a waiting list to have access to its private beta

In this case, Robinhood built brand awareness and drove customer retention with a FOMO marketing strategy that ultimately enticed potential customers to take advantage of something that they might not have access to later.

An effective marketing strategy will contribute to your startup’s growth and survival if you can build awareness about what you’re selling by putting it in front of your audience and staying true to your brand.

 

Rushing Your Idea Without Validating It

Building a startup is a process that’s constantly in flux. There are no specific guidelines, but you should always be flexible. Don’t fall into the trap of rushing the development of your idea or bringing it to market too early

I was lucky to have many mentors during this process who were able to guide me and question my product road map to ensure I had covered all grounds. You’d be surprised how important it is to validate your idea and think about how you can further improve on it prior to following through with any commitments.​​​

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