Red Flags for Entrepreneurs in Early-Stage Building

Watch out for these red flags in early-stage startups.

Evie Lutz
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August 9, 2022

How to recognize the danger signs

At Atlanta Ventures, we encourage entrepreneurs to do their due diligence before launching an early-stage company. For entrepreneurs, making informed decisions and assessing issues are essential in the early stages. Over the years, we’ve seen the launch of thousands of startups, and have surfaced a few red flags you should look for within your team and your product in the early stages.

Red flags within the team

Job expectations are vague.

Startups are a collective team effort, and early employees often wear many hats, but it becomes a red flag if your employees are not clear on the founders' expectations. Suppose an employee handles multiple jobs early on and after scaling the team, they are no longer clear on their responsibilities; it's time to make a change. Without clear leadership and definition of roles and responsibilities, your company risks becoming disorganized, and may lose team members and focus as a result.

Lack of communication.

Often in the process of growing companies, 'silos' departments are unintentionally created. Eventually the categorization of employees in different departments leads to a lack of integral information among your startup. The 'silos' effect can hurt your company from having a single, unified vision for both individuals and your team.

Red flags within the product

It's not a must-have for customers.

Talking to customers and discovering if your product has genuine, authentic demand is vitally important before you start to build. Consumers will not buy a product unless they perceive it as having value. If through customer discovery, you find that your product or service is one they'll just appreciate, then take it as a red flag. Successful entrepreneurs develop products that are highly valuable to a specific market.

There's no room for scaling.

Successful startups do not rely solely on a terrific idea. Most ideas usually require several pivots; the most crucial lesson is testing and learning how to fail fast and move forward. It could be a red flag if your product is rigid and has no room for scalability and growth.

Most startups are guaranteed to undergo many tribulations during the early stages of development. Using these red flags as a tool, we hope it will help you curate the right questions to ask yourself when making important and informed decisions regarding your team and your product.

What have you found are some other red flags in early-stage startups?

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