4 Big Pitfalls for Digital Startups

4 Big Pitfalls for Digital Startups

OBA Guest blogger Anthony Lance, founder of Phatrice.com, shares their company’s experiences regarding the 4 big pitfalls for digital startups:

1. Probably the biggest temptation for online based startups is to put too much emphasis on the digital experience right at the beginning.

We dropped most of our initial funding into building a snazzy site, but when the company that we had commissioned to do the job failed, we were left with very little money, and very limited resources. We ended up starting with a Magento based template site, and then hired a freelance web designer overseas, to customize it to have some of the basic features we were looking for. In the end we spent about US$4,000 to build the first stage of the site, and to be perfectly honest, it was great! Start with something cheap and easy like Shopify to test the model first. I’m amazed at the flexibility and ease of use from some of the new template-style site developers. If you go with Magento or WordPress, I recommend getting a template and then hiring a freelance coder through oDesk. We have had great success with this.

2. Stubbornness can be a real killer for startups.

When we started off our goal was to have a snazzy retail business and focus on exciting marketing activities that would drive consumers to our site, but only weeks into our launch we received interest from a large bank wanting to buy 1000 bottles of one product, but required customization to have their logo printed on it. We were completely unprepared for this kind of business so we lost the order and it took us almost 4 months of initial retail sales to sell the same amount of product through our retail sales. As much as we wanted to grow our retail business, our advisors started telling us that the money was with these large corporates looking for large orders. It was a tough decision only a few months into the startup to tell the team to spend two months focusing entirely on developing a B2B site and working out B2B partnerships with all of our product partners. Our retail sales suffered, but after a few B2B orders started coming in we realized that not only was this a good sales revenue for us, but it was in fact helping to do marketing for our retail site as well. Selling bulk orders to corporates and event planners is not nearly as sexy, but as a startup you have to be ready to make directional changes when needed. Be very tenacious, but don’t be stubborn.

3. Perfection is the enemy of the great.

At one point I came down pretty hard on the person we had doing our EDMs as I was disappointed at the level of attention to detail. In hind sight I realized that I spent more energy trying to build the person’s confidence back up than what could have possibly been lost by having one bad link in an email. There is no replacement for having a leader who pays attention to details and holds the team to a high standard, but especially for a startup you will be working with people who are likely underpaid, less experienced and learning things for the first time. A leader needs to have a lot of patience and grace for the team, because expecting perfection will likely only lead to upset team members and actually end up killing the creativity of the people in the team. Some of the best ideas we have had for marketing have come from casual conversations around the lunch table, so developing a safe work place where mistakes and imperfection are okay is important to not only the morale of the team, but also to the overall success of the team.

4. Having full time employees does not mean being more productive.

We initially tried hiring a couple of full time employees, but of course we could not afford a full salary, so the caliber of people that we attracted were not exactly incredible. I did a talk at a local university and managed to attract a couple of students who signed on to be interns. They were bright, switched on, and learned very quickly, so even though we only have them for a dozen or so hours in a week, they actually began to make significant contributions to our team. Currently over half of the people on our team are now working part time because we have adopted the philosophy that we would rather have a little bit of an excellent person’s time, than having a lot of a weak employee’s time. The other thing to consider is that most outstanding people have more than one thing going on, so you are unlikely to attract their full attention, which is okay as long as you have enough interest and commitment for the things you need them to do. This makes managing the team a bit more of a challenge, but having a team full of outstanding people is so encouraging that it makes me exciting to come in to the office every day. Weak people not only under-perform, they drag the entire team down with them. Find outstanding people, and find some way, any way, to get them involved. Make them a part time employee, give them a work-for-equity offer, make them an advisor, whatever it takes!

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