However, just because the odds are against you, it doesn't mean you shouldn't do it. Some of the most important lessons come from failure.
That said, you should do everything you can to make your startup a success. To do that, avoid these four common pitfalls:
1. Your idea isn't as good as you think.
First of all, even the most brilliant entrepreneurs have terrible ideas. Most have the sense to get feedback from trusted experts/peers and test their ideas before making any commitments.
If you're asking friends and family for feedback, pose it as the idea of a friend or a colleague. If they know it is your idea, their feedback will be biased.
Run small tests to see if people will buy your products before you invest a lot of time, money and effort into it. Set up a landing page, run a Google Adwords campaign, offer a MVP (minimum viable product) to a focus group. This will show you if there is a market and a need for what you want to create.
Second, your ideas are never as original or as good as you believe. Research has found that people often suffer from an illusion of superiority, in which they overestimate their abilities and their value. In a study of drivers, participants rated themselves as above average or exceptional, even though it was based on their own standards. Even worse, confirmation bias makes it harder for people to change their minds when they're set on something.
Most startups are slight modifications of other companies. Do your research early on. There may be countless people who have already tried to do what you're trying and failed or a better solution may already exist.
2. You're partnering with the wrong person.
Select your founding team members carefully. Sometimes, great friends are terrible cofounders.
Early-stage startups need to bring distinct skills, strengths and experience to the table. Someone who has had years of experience in finance may want a technical cofounder for their fintech startup.
Once you've assembled a strong team, make sure that roles, responsibilities and ownership within the company is absolutely clear. Companies often implode and friendships are destroyed when there isn't a clear agreement from the start.
3. You'll run out of cash.
Before even thinking about venture capital or going public, you need to be cash flow positive as soon as possible. Some entrepreneurs will spend lots of money under the guise that it will accelerate company growth. It probably won't.
Instead, get paying customers or users first. Monetizing a business is one of the most difficult, and critical challenges for startups.
It can take years and require you to bootstrap, but it's better to have 30 paying customers than 300 free users. In one case, it's a business. In the other, it's a hobby.
4. You don't know anything about the business.
I made the mistake of joining an education startup in the mid 2000s. Soon after, I realized that no one on the team had worked in the industry. "Shockingly", the business tanked.
Successful entrepreneurs gain experience and build connections within an industry before they ever launch their company. Don't try to start a business in an area where you have no expertise.
It takes time to develop contacts, understand customer problems and build trust with a consumer. If you've never worked at a bakery, you shouldn't open one. You don't know the pitfalls or the business of it. You might love fashion, but it doesn't mean you understand the business of fashion.
Although successful startups are glamorized, building one is harder than it looks. Failure is part of building a business.
As an aspiring entrepreneur, you're going to make a lot of mistakes. However, if you fail, it's probably because you've fallen into one of these pitfalls. If only you'd known about it early on.