Managing a startup business is one of the most difficult things in this world. The startup owner is the only one responsible for the launch and growth of his firm. If he screws up, his company closes down. It’s a type of responsibility he can’t share with others.

It’s not surprising at all that 96% startups in the US fail within the first year of starting their operation. No matter how depressing it sounds, the naked truth is odds are stacked against startup owners, at least in the US.

That being said, startups have more growth opportunities than large corporations. As an organization grows in size and scale, its growth opportunities saturate. Yet, these organizations continue to grow and their small-scale counterparts fail miserably.

Why so?

One reason is people running startup firms fall into traps they should watch out for. Knowing what to do when starting a businesses is not enough. Avoiding the traps is important as well. The traps include:

Prioritizing profit, not growth

That’s perhaps the biggest trap out there for a startup. In the nascent stage of a company, startup firm should focus on growth and growth alone. But nine out of ten startups do the exact opposite. They focus on making profit and that hurts their company’s prospect.

Why is it a trap? And more importantly, aren’t growth and profit connected.

It is a trap because there’s never a one-to-one correspondence making profit and undergoing growth. A startup might luck out and get few clients and earn profit this way. This is a short-term gain, not a long-term one. Extrapolating a sudden opportunity to consistent growth requires diligence and persistence, and on top of them, correctly understanding the reality.

Most startups don’t self-evaluate after making profit. As a result, when the financial reality around them changes or they enter the larger market, they fail. Many startups are first-movers in their industries. When the market becomes ripe with other players, the first-mover advantage is gone. That’s when they stop growing.

When a startup prioritizes growth, it takes measures to strengthen its value as a brand. Over the time, its clientele increases and it eventually makes profit. Hence, making profit at the expense of growth is a terrible idea.

Lure of free stuff

It’s hard to resist the temptation of free stuff. A startup should never ever go for anything that’s freely available. For example, free consultation with industry insiders. Yes, startup owners can meet industry influencers and ask them for advice.

But a professional never gives anything for free. Attending business summits, industry meets and seminars is good for learning, but if the attendance is free, don’t expect any “secret growth hack.”

A startup should avoid free WiFi and free software at any cost. Less-known WiFi connection providers promote themselves using the “free” damper and startup companies are often their soft targets. Free WiFi is cost-effective, but the reward is not worth the risk. Free WiFi hotspots don’t use WPA2 security protocol, making startup data unsecure over the Internet. Symantec surveyed 15532 mobile users who connect free WiFi hotspots and found over 80% them put their privacy information at stake.

Free software come with problems in droves. Startups often couldn’t identify those problems. Linux operating systems, for example are free. Many startups instruct their employees to install Linux kernel based OSs such as Ubuntu or Fedora on their work station machines. But these OSs don’t automatically receive updates. Manually updating them could be time-consuming and there’s always a chance of data loss.

Besides, most free software don’t have anything worthwhile to offer.

Overseas big-budget clients

Yet another trap that all startups should watch out for. B2B startups find it hard to resist the lure of clients from overseas countries, ready to invest tons of money. What they don’t understand is several other startups are competing for the same and closing such high-quality sales is incredibly difficult.

This is a B2B-specific trap as B2C companies go for end consumers. So pay attention if your startup company operates in the B2B segment. As a startup owner who prioritizes growth, you should focus on local brands and merchants. Most of them are small businesses. Your objective should be creating an ever-lasting network with them. According to government reports, there are more than 28 million small businesses in the US, accounting for over 99% of all US businesses.

Benefits of doing business with small, locally-owned companies:

  1. You can find them easily as they may be located couple of blocks away from your office. Offline communication is often better than online communication.
  2. Highly affluent clients are highly picky as well. They may not select you for the next project. Small-scale, local businesses can give you more work in the future.

I am not saying you shouldn’t aim at large clients, based out of overseas locations. All I am saying is your priority should be businesses located closed by.


Success is always conditional. It depends on avoiding mistakes and doing the right things. As a startup firm, when you identify the traps mentioned here and avoid them, your odds of success greatly escalate.