Top Pitfalls a Startup Founder Must Avoid At All Costs


By Shrijay Seth

To err is human. But for founders, a mistake can prove way too costly when starting a new business. There are things you should know before starting a new business and then there are certain mistakes to avoid.

It is possible that a founder may make an erroneous decision that takes a heavy toll on a new venture, hampering growth.

Avoid such pitfalls in the early stages of your StartUp – Read on and Start right!

  1. Starting a Business without the Money

Many founders get carried away with just the idea of starting a new business. There is one school of thought that firmly believes in ‘money is not a problem for starting up’ and then there is another -‘Financing your business right’.

The first thing a startup founder should do is to ideate on revenue-generation. The business model at least has to be sustainable, if not profitable. Not having the finances in place can create a major obstacle in personal life as well. For an entrepreneur to work effectively in the business, a balance in personal and private life is crucial. And that is why balancing both the endsfinancially, will allow you to prosper as a founder and an as an individual as well.

If you struggle to make your professional ends meet, go trade your skills for generating additional sources of income.

Starting a digital marketing company? Why not raise funds for yourself by trading your marketing skills for other clients? Same applies to other industries. You need to scout the open market and sell your skills for generating funds for your dream startup. There is no way you should start a business without the money with the philosophy of ‘going with the flow’.

  1. Underestimating the Startup Ecosystem:

Working in isolation is never an answer. Break the silos and get into the ecosystem as soon as you launch your business. The startup ecosystem is evolving resiliently and you never know where your next big break is coming from.

The startup community offers more organized networking opportunities where you stand a chance to bump into another entrepreneur having the ideas and connections that your business might need.

Catching up on the startup networking events in town and meeting fellow entrepreneurs will be a great leap towards synching with the local startup ecosystem. Even when it comes to funding the acquisition or getting co-founder(s) on board, leveraging on such a dynamic ecosystem makes good business sense.

  1. Looking for instant visibility:

Selling is the key to kickstart your business and a part of selling is reaching out to people on different platforms. Look carefully what you put out and sell only that is true and possible.

There are times when founders over-commit to get clients on board and then fail to deliver as promised. Startups should avoid falling prey to the “over commit and under-deliver” trap, especially during the initial days. It is important to keep a tab on what content you roll out and what perception you are building.

Probably, doing that can cause lower your NPS score which in turn makes the job to acquire funds from other sources, difficult. Moreover, the necessary social media presence will also be affected with people strongly voicing their concerns on your pages. The negative feedback may flood your social media channels and that is counter-productive to brand building initiatives. Focus on delivering more value and less of promises – this is a sure way to win new clients.

  1. Re-inventing the wheel:

Founders may think of innovation as the key to a successful startup but that is not the case always. Not all startups need to be based on innovation. Although it is great to be an innovator, every business need not be started with a formula like that.

There are other ways to start a business which includes leveraging on the existing know-how and then creating your own version that adds value.

Start educating yourself with the existing solutions but do not tweak to unnecessary degrees.  Or perhaps, improving on what’s already out there. Based on my experience it is more of the latter.

View things from the users’ perspective and not merely from the founder’s perspective; this can help resolve problems better.

Software-as-a-Service (SaaS) as a standalone industry is exploding. This makes new entrepreneurs with a background in software development jump into this business.

These founders put themselves under pressure for offering a product that has “unique and revolutionary” features. What they fail to identify are customers’ needs and market scenario. Involving yourself way too much for a “pathbreaking innovation” may have you turn a deaf ear to what customers actually need.

  1. Not Having Legal Clarities:

Most founders are way too busy in strategizing and executing their ideas. This may lead to giving legal clarities a miss. One of the ways is to have a legal partner who can take care of all the necessary compliance and procedures. For example, if there are Co-founders, then you need co-founders agreement in place.

While starting up, you will need to have legal documentation in place especially for individuals working in significant capacities. Startups dealing in sensitive client data will need the agreement for non-solicitation or 3rd party agreement.

Having an employment contract while building the A- team for your startup is also a good idea where you can offer ESOP, remuneration, and also mention the consequences of leaving the job abruptly. The conducting of a business environment must also be stated in the contract so as to keep the affiliates away from poaching.

For technology-driven startups, it is common to add clauses for only non-competitive business job change upon termination.

Over and above agreements as mentioned founders must also consider having a non-disclosure agreement, terms and conditions for website usage, etc. that represents business’ concern. Also, it is common to have an HR policy, Vendor Agreement, and ensuring your business follows all the necessary licensing agreements.


It goes without saying; founders need to be highly cautious with every aspect of the business and any error may cost them dearly.

Have you, as a budding founder, committed any mistake while building your business?

If so, what advice do you have for the other founders starting a new business? Drop in your precious two cents in comments.


Shrijay is an entrepreneur with more than ten years of experience in working with hyper-growing digital commerce companies across the globe. Currently, he runs an eCommerce strategy and Analytics consulting company, along with a LegalTech venture in India called