The 6 Deadly Mistakes First-Time Founders Make (And How to Avoid Them)


In the startup world, we often celebrate founders like Mark Zuckerberg of Facebook and Drew Houston of Dropbox, admiring how they built massive startups from scratch.

And while the success stories are nice, there’s another side of the coin: learning from others’ mistakes.

From failing to write partnership agreements to mishandling your company’s accounting, anyone can learn from the most common mistakes of others, to give yourself an even greater chance of success.

With the above in mind, this article will reveal six common mistakes that rookie founders make, and show you how to avoid them.

1. Postponing Your Company Registration and Partnership Agreements

You might be innocently kicking around a few business ideas with friends, but when those ideas turn into a lucrative business and the money starts rolling in, things change. Sometimes friends turn out to be enemies.

In other words, beware of landing in the same pickle that Facebook creator Mark Zuckerberg did. During his Harvard years he discussed plenty of ideas about a project called ConnectU with “friends”. Later he started Facebook on his own, and co-founder Eduardo Saverin entered the picture. Those conversations and business decisions came back to haunt him for a long time afterwards.

Zuckerberg faced protracted legal nightmares for making the rookie mistake of not registering his company ahead of time. He also didn’t create the proper partnership agreements.

Registering is relatively cheap and simple to do, and a registered company can lie dormant until the time is right.

2. Trying To Cut Costs on Professional Advice

Hiring the cheapest possible legal and accounting help may seem like a savvy idea, but cheap lawyers and accountants can end up costing you a fortune in the long run.

Writing for Forbes, entrepreneur Amy Rees Anderson shares a lesson she learned the hard way:

One of the biggest mistakes I made early on as an entrepreneur was hiring cheap lawyers or not using an expensive lawyer nearly enough, thinking I was saving money for my business. But over the years, the school of hard knocks taught me just how expensive cheap legal help can be.

This is particularly important when it comes to protecting what is yours. Your valuable intellectual property needs to be protected before hiring developers. To that end, you have four options: You can use a copyright, patent or trademark, or as a last recourse, get a signed NDA (Non-Disclosure Agreement).

3. Becoming Blinded by the Love of Your Product

You have to believe in your product. It’s your great idea – your brainchild – and you have a lot invested in it. However, being blind to the faults of your product is a common rookie mistake. It pays to keep an open mind.

There is always room for improvement, no matter how good you think your product is. The only sure way to know if your product or service is going to work on the market or not is to launch it. Prototypes and market research can only go so far.

The creators of Instagram scrapped their product more than once before hitting on the winning formula. No doubt the earlier proto-product (called Burbn) had its merits and the creators loved it, but they had no qualms dropping the ideas that simply didn’t work. Their strategy paid off.

Monetization, leadership and organization are just as important as a cool product, so make sure you’re not focused only on one aspect while neglecting the others.

4. Keeping Expenses Low (No Matter What)

Saving costs is part of the entrepreneurial mindset. Why buy the top of the range when you can make do with a generic alternative? But sometimes, buying cheap ends up being more expensive. We’ve already discussed legal and accounting costs, but the same rule applies to other areas of your startup too.

It might be worth investing more in areas that are integral to your business, like rent, for example (if your business is dependent on your location). Another thing to consider is the quality of your hardware. It’s going to be used constantly, and downtime can end up costing a fortune. Don’t cut corners where it really matters.

Marketing is another area that often gets neglected; a couple of cheap flyers on the street corner (or the digital equivalent) definitely won’t get you the international recognition you’re looking for.

Right from the start, decide where you will save and where you will spend.

5. Doing Everything Alone

As a one-man-show it’s impossible to cope with every aspect of business like a pro, no matter how multi-faceted your skills. It’s important to know (and accept) your limits. At some point, working longer and harder will have a negative impact on your income stream.

As founder or CEO you’re not meant to know all the details about everything, so learn to delegate. Leave yourself enough free time to consider the product, the big picture, and allow room for growth. Hire part-time help or consider partners.

Finally (and perhaps most importantly), make sure that you take time off to recharge. After all, if the founder of the company burns out, every other employee can suffer.

6. Choosing the Wrong Partner

This is one of the most common rookie mistakes, and often carries the most serious consequences.

Choosing a startup partner is comparable to getting married. People, circumstances and businesses change over time, and disagreements between the principal partners often lead to the end of the road for burgeoning startups.

Make sure you have an agreed vesting period. If one partner decides to quit, this will protect the others from disaster and enable them to continue while looking for a replacement.

It’s important that your skills complement each other from the outset, and if you’re having arguments all the time before you’ve even launched, it might be time to reconsider the partnership. It’s always a good idea to keep disagreements impersonal and allow room for opinion, but at least agree on how to resolve impasses.


As an entrepreneur, you may as well face it: You’re going to have your fair share of obstacles while growing your business, so don’t make things more complicated than they need to be. Avoid the above rookie mistakes right from the start, even if the work necessary seems like more trouble than it’s worth.

Even with all the right tools, and the best intentions, nothing in life is guaranteed. The most successful entrepreneurs know this, and aren’t afraid of taking calculated risks. The ones that make it are simply better at avoiding the biggest mistakes.

What’s the #1 rookie mistake you see startup founders making today?

  • Great advice – thanks for the post.

    • Tom Ewer

      Thanks Elliot!

  • Awesome advice! I sometimes have the problem with being blinded by the love of the product or service. Working on it!

    • Zach Grove

      Yeah… I think we all do Darius! Thanks for commenting.

    • Tom Ewer

      Yup, it happens to all of us. 🙂 Thanks Darius!

  • For partnerships what is a usual vesting period? Can you recommend where I can find relevant reading matter?
    Thanks for the tips!

  • Excellent post–I do have a question though: would any of the advice given change if you were talking about a solopreneur venture? Curious … again thanks for the insightful article.

    • Daphne Sidor

      The partnership considerations might not apply in that case, but personally I’d say everything else applies just as much to solo ventures—some of the biggest regrets I hear from solopreneurs involve points 2, 4, and 5.