7 reasons your startup costs more than you budgeted
“Just give me $500K and a tech guy and I’ll make this idea a success.”
Here are 7 reasons your startup costs more than you budgeted…
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#1. You haven’t understood what the market will pay for. — First-time founders mistake enthusiasm for validation and leap straight to building a product nobody wants. If you do that, you’ll have to start over.
#2. You haven’t listened to warning #1. —Maybe you’ve built a successful service business before. So you’re a second-time founder, right? Those lessons don’t apply to you? Sadly, that feeling of being bulletproof can be a disadvantage.
#3. You’ve assumed that building your product is a one-off cost. — In reality, your product costs never end. The only reason you won’t need to modify, maintain and improve what you’ve built is because nobody’s using it.
#4. Your funding requirements are based on the assumption that you’ll get your tech solution right first time. But unless you’re the first founder in history to achieve this, you’ve designed it wrong. You’ll need to rebuild it at least once. Probably several times.
#5. You’ve underestimated how long it will take to generate meaningful revenue. If you’re building SaaS or clipping transaction fees, you need thousands of customers to make meaningful money. Will you fund that growth yourself?
#6. You’ve underestimated how hard it is to raise capital. For a tiny minority of founders, funding happens quickly. For everyone else, it takes 6 months or sometimes years. No traction? No funding. How can you keep the lights on and build excitement while you’re raising? It’s easy to invest more of your own money than you can afford to lose.
#7. You assume that your product is so good that it will sell itself. But it doesn’t. You now need money for marketing and media spend, and/or you need someone who knows how to promote and sell tech.
#8. You go through two or three different tech partners / fractional CTOs before you find one that works. Each time you change, the new one will tell you it’s cheaper to start again than to work with what the previous joker produced.
What else?
