Are you really tired of living a 9-5 work life and would love to strike out on your own and be your own boss? Well, there never was a better time than the present one. The advances in information technology have lowered the entry barriers to new lows, and whether you want to bootstrap or raise venture capital for your business, the options for raising funds are wider than ever before.
Being an entrepreneur is one of the most difficult jobs ever as few career paths require the kind of work, skill, sacrifice and commitment it warrants. It is hard, no doubt, but is also really rewarding. But before you decide to take the plunge, it is important to understand some common mistakes that plague so many entrepreneurs today, no matter which field or business you are in.
Many wanna-be entrepreneurs fail to anticipate or realize that their path is paved with bumps and humps that can make even the most seasoned entrepreneur fall, if they do not exercise enough care on the way. How do you ensure that you get to succeed in a hyper-competitive, crowded marketplace? One thing you can certainly do is: avoiding the most common mistakes entrepreneurs commit by learning from the experience of others. Even the most seasoned entrepreneurs commit many mistakes, which they don’t wish to talk about openly. But sharing such experiences with others can help them avoid committing the same mistakes in their journey to success.
10 Most Common Mistakes Entrepreneurs Make
As part of my life coaching experience, I often get to talk to many people looking for corporate counselling. Well, here are my two cents on the Top 10 Commonest Entrepreneurial Mistakes, many of them based on what I have learnt from my entrepreneurial journey so far:
Lack of focus
Experts involved in corporate counselling often point out that a clear business focus makes it easier for you to communicate about your product and who it’s meant for. In contrast, by trying to appeal to all by adding all sorts of features, you dilute your marketing message and end up with a complex product. Take some serious inspo from Dropbox and Instagram to focus on doing just one thing really well.
Any business coach worth their salt can tell you that it’s not easy, given the multiple kinds of pressures coming from customers, investors or team members. But learning to say no is something you need to cultivate if you want a usable product. Getting the core right makes your life much easier. A good technique to achieve it is to make a list of things you WON’T do by adding some constraints to the development process – so everyone knows what the product ISN’T. This way, you can hope to make better product decisions and learn a valuable trait common to all successful entrepreneurs.
This one ought to be the starting point of any enterprise, but it often gets overlooked. Quite often, entrepreneurs plunge straight into their ideas without thinking of why they’re doing what they’re doing or thinking about the change they wish to bring about in the world.
Let’s face it: In the absence of a clear purpose, no enterprise can move along with much momentum. And when things get tough (which they are going to), there isn’t much to pull your team through. A clear purpose adds real meaning to one’s work something that people can rally around. It gives your brand real weight as it has got a reason for its being. Therefore, it’s worth spending time giving shape to this idea and articulating it. Notice carefully that the following taglines don’t mention any product anywhere:
“Connecting People” – Nokia
“To be the earth’s most customer-centric company” – Amazon
The fact is, as an entrepreneur, you need to awaken an emotion among your early customers so that they feel something special, return for more and tell their friends about it. Consumer research reveals that most buying decisions are based on emotions, rather than on any logic as people don’t buy what you do; rather, they buy why you do it. If your customers believe your mission – i.e. what you believe and where you’re going, they’ll listen to you and how you do it. So, by focusing on the question of ‘why?’ in business, you can forge a deeper connection with your target audience and give your business a better shot at success.
Without any focus, you will harm not only your business but also your relationships with clients and partners, too. But the lack of ability to find focus is very real in many cases. Instead of feeling bad about the lack of focus, you can try turning it into an advantage. Just think of Richard Branson and the diverse products he offers. Now, if someone were to judge Branson negatively for a lack of focus, they could be excused by just looking at Branson and his diversified product portfolio. So, if you have a hard time finding your niche, try to adopt a diversified business model.
Building a product no one wants
Life’s too short to build something nobody wants.
Any business coach’s first piece of wisdom for you is to ask to build something that people really need and are ready to pay for. Mostly, the “right” product is simple, compelling, and aligned with your business model. But often, you see websites/apps that look nice and seemingly offer a good experience, but upon deeper study, you find there’s no obvious value offered to the user. Either the problem being solved isn’t big enough or the proposed solution doesn’t hit the right note to gain significant traction.
Therefore, first of all, try to ensure that you build the right product before you perfect the experience. Besides, before building the product, you may have a discovery phase to explore the market, test your risky assumptions and discover potentially more lucrative opportunities. Most business ideas are based on its founders’ assumptions, which are yet untested. Many business disasters could have been avoided very simply by talking to customers. So, it’s your responsibility as an entrepreneur to find a valuable and desirable product. It makes no business sense to build something unless there is evidence that you have found the right product.
Not enough listening
‘Make things people want, not make people want things’.
Those involved in corporate counselling never fail to highlight this point. You DO need a sales pitch, but you also need to listen. Funding is so important to early-stage startups that they get pro at perfecting their sales pitch pretty soon. It’s great news if you’re looking for funding, but not so good if you’re searching for a product-market fit. Without a proven business model, you run the risk of missing opportunities that could come from just listening to people.
Developing entrepreneurship skills also includes, besides developing the art of speaking, cultivating the art of good listening, too. While exploring a new product idea, we often conduct customer interviews without ever mentioning a solution. This exercise aims at a better understanding of potential customers to see if the problems we’re trying to address are a real pain for them. So, proposing a solution early on can take the conversation away from many missed but potential opportunities. The key is understanding your customers’ problems before selling solutions.
Launching too late (or too early)
Too many startups spend months or years in a ‘stealth mode’, away from the public eye, and never come to the point of releasing their product. Lack of planning is a formula for failure, but too much of it can also cause a disaster. Too much planning can weigh you down. In fact, a good plan always leads to a decision. Focus on a few key themes instead of addressing all potential problems at once and strengthen the revenue-generating areas before moving to minor issues.
On the other extreme are those businesses, which launch a poor early version in the true lean startup style. But it would be a blunder to release it if it’s not ‘bare minimum awesome’. Ensure a base level of design and usability, else you will not get the results you’re hoping for. Of course, getting the balance right between launching early and creating the perfect product is not easy but perfecting it could pay rich dividends.
Keep in mind that your first release is just the beginning, not the end of the process. Try to learn from customer experience, revise and improve as you go along, but avoid overloading features on it. Instead, try to focus on optimizing your core product before adding more.
Design can make-or-break
Many entrepreneurs often see little value in investing in design. In many cases, it can be a missed opportunity. Especially in the startup world, the culture of solution or technology first has prevailed, whereas they need to take a people-centred approach to developing products and services.
Unless the product you make delivers real value to customers, it’s just a vanity trip, regardless of the technology. Entrepreneurs need to learn about the competitive advantages coming from well-designed products and services. Just look at what Xiaomi, Nokia, Apple do in terms of designing and you’ll get the idea. It’s worth every penny you spend on it.
Hiring wrong people
Many well-funded startups hire people too soon, before they really know about the sort of person they need. Meeting your future spouse in a nightclub is as unlikely as meeting your long-term business partner at a local gala. Thus, it all boils down to pinning down your organizational DNA. With a strong vision and set of values driving you, you’ll know the sort of person who will be the right fit. No talented person would like to work unless they have a real bond with you and believe in your organizational purpose.
Expecting success too soon
Expecting success right away is setting oneself up for disappointment. Undoubtedly, it’s a great idea to be armed with the confidence and the drive to succeed fast, but don’t expect it to happen right away. While it takes a long time to grow a business, it takes even longer to make money from it.
Therefore, you need to have realistic expectations and show patience. Why so many businesses fail early on is because entrepreneurs expect to make money too soon. Many a time, businesses have to shut as the entrepreneur can’t pay the rent anymore as they had expected to earn money right away to meet business expenses. That’s why having a cushion to fall back on and being realistic is so crucial for the success of a business.
Getting the wrong investor/partner
Those looking for corporate counselling on setting up a new venture need to bear in mind that find the right investor is as crucial to business as finding the right partner. Simply because someone has the moolah or someone is your friend or a family member doesn’t mean they are necessarily the right partners / investors for you. It’s quite tricky to pick the investor who can be a good fit for your business.
The foremost thing to remember while choosing the right business investor/partner is it is akin to a marriage, which obviously means that there will be misunderstandings and conflicts. However, it’s important to realize that such misunderstandings need to be addressed logically. Therefore, it is essential to set the right expectations on Day 1, so that you know what to do and expect in future.
You can start finding the right partner by understanding the investment options available. Study them before choosing one and don’t be afraid to ask what the investors can provide. It will also give you an idea as to how much involvement the investor will have in the business- just financial or operational or strategic. And finally, make sure that your investment pitch clearly articulates your vision and business plan.
Chasing investors, forgetting customers
Having a great business idea doesn’t mean that you’ll definitely get funding. One of the surest ways to ensure survival is to design a business model that lets the product pay for itself. These days, you can find so many businesses too much focused on building a pitch rather than a business. So forget about funding for a moment and try to find a customer to pay for your product. Getting some more customers and investment becomes a lot easier that way.
Besides, while scouting for investment, focus more on the product vision and the story and less on the (manufactured) numbers. Like a true entrepreneur, worry about the things under your control (a great product and customers delight) rather than things beyond your control (getting VCs, angel investors).
Foster customer loyalty
Let’s admit: There’s a direct correlation between a positive user experience and user loyalty. It has repeatedly been proved that a happy customer tends to spend more money, more often. But more startlingly, a happy customer tells only 4-5 friends on average about their positive experience while an unhappy one tells many his friends more times this figure.
Customers are savvier now and don’t put up with a poor product/ service if there’s a better alternative available. For you, your customers’ experience is the main contact with your brand. So, it’s the key to finding ways to ensure customer delight. In case of a negative emotion, they will likely never come back (or even worse harm your brand with bad reviews).
Trying to do everything yourself
There is enough evidence to show that multitasking can harm your brain and affect your productivity. Multitasking doesn’t make your company grow quickly or enhance your profits. In fact, it can do just the opposite as you may wear yourself down by wearing too many hats at the same time.
So, good entrepreneurs always delegate – plain and simple. If you are trying to do everything by yourself, you are planning to fail. Therefore, it’s important to know when and how to outsource. Hiring others to take care of some tasks that you cannot handle on your own is a sensible idea.
Different entrepreneurs have different tasks that they want to outsource. Regardless, it is important to understand that you delegate to them certain tasks so that you can make better use of your time and put yourself in the best position possible. Doing everything yourself will only burn you out or draw your focus away from the tasks that need your attention.
Hiring/ spending too quickly
While it is not advisable to do everything by yourself, hiring people too soon can also mean disaster for business. A good way to determine a good time for hiring is to look at the growth of your business. Just because you see a sudden growth rush doesn’t imply that you go hire right away. Try to make sure that the increased workload sustains itself for a good enough period before you start hiring.
Business and finance go hand in hand. No sensible businessman, be they small or big, in their right mind ignores this factor. Having a regular tab on your financial statements will help you know where it really stands. You can evaluate which areas are guzzling up a major chunk of your cash outgo and where you need to cut down your spending.
Ignoring social media
Many conventional-minded industrialists believe that they don’t need the Internet. But the hard fact i : whether you are a small enterprise or a gaint one, you need the Internet. Simply because your customers are there and any business that aspires to be successful needs to be where its customers are and meet them there face-to-face.
Entrepreneurs need to harness the current tech revolution right now. In fact, the Internet and social media are very economical tools to use, and more importantly, they work very fast and are damn effective. Besides, they have the power to spared the good (or the bad) word really fast.
- Don’t be afraid to fail/ commit mistakes
- Make a business plan
- Get yourself organized
- Understand the market and your target audience
- Don’t do everything by yourself
- Find the right partners / investors with due diligence
- Don’t hire too soon
- Be ready to experiment/ revise your product offering
- Don’t launch your product too quickly/ late
- Don’t expand your business too quickly
- Create a proper marketing plan
- Don’t hire the wrong people
- Don’t over-promise or under-deliver
- Harness the power of the Internet/ social media