“As an entrepreneur, you may have to completely rewire your brain until your process becomes deliberate, studious, and efficient.”
#1 Don’t Fly Solo: The Value of a Partner
First off, understand that you do not have to do this alone. Of course, we all want to take control (especially sole proprietor types) and do everything ourselves because we feel this is the only way things will be properly executed. Going it alone requires that you carry the full workload of your company, which means that you also must maintain the energy and charisma that is necessary for wearing all the different hats which could be worn by others who would probably do it better than you (this is discussed in the next point). Very few people can handle the daily grind of starting a business by themselves, which is why most investors, banks—even accelerators and incubators—consider solo entrepreneurs to be a higher risk. You are 5 times more likely to acquire funding if you have a partner. Think of this partnership as a marriage. A good partnership will see you through the dark times, and there will be many of those times. You will no doubt have disagreements, and you must take this into account at the very beginning because when those disagreements happen, there should be provisions in place (by-laws or partnership agreement) that outline how to handle any conflicts in a way that is unbiased and fair. Trust between partners is paramount, but even married couples have prenuptial agreements.
#2 You’re Good, but You’re Not That Good
A well-operated business employs different people wearing different hats, as it applies to their respective field of expertise. At the beginning, you will most likely be wearing all the hats, but as you grow, be sure to surround yourself with people who specialize in their particular fields. It stands to reason that you would not be an effective business owner if you were not a Jack of all trades; however, the growth of your business depends on hiring people who are masters of their fields. It is difficult for many entrepreneurs to make the transition from being the talent to managing the talent when they have invested so much time, money, and heart into their business. As long as the professionals you hire are committed and qualified, though, these people will help you greatly in fulfilling your vision.
#3 Going with your Gut Instead of Sharing Your Idea
You may think your idea is a game-changer, but the truth is that you do not know if the idea is marketable until you share it with others. There is no way to tell if a demand exists for what you are selling until you consult with experts within your industry and get your product idea in front of potential customers so that you can learn and adapt, based on their feedback. The more you consult with quality professionals who have already had success in your particular industry, the more you will discover how well your product will do and what you may need to change; the more you share your idea with the public, the closer you will get to meeting the needs of your customers.
#4 Not Knowing when to Pivot
There will be times during the conceptual and developmental phases when you will receive valuable feedback from peers and customers that are contrary to your business plan, and you will have to decide whether to pivot or to stay your course. Many times, your customers will reveal problems or deficiencies in your product or service; this is when you can save valuable time and money—if you pivot to fit what the market is asking for. Even if you change your plan of attack after your product goes to market, which is more difficult, suiting the needs of your customers is the top priority.
#5 Neglecting the Voice of your Customer
And that is of the highest importance: Respect your customers and think of them as your friends. Yes, they are giving you money, but that’s not why they are your friends. They are your friends because they are the ones who believe in your product enough to use it–and even more than that, your customers will tell you exactly how to design and market your product in a way that appeals to them. This is huge, and so many entrepreneurs overlook the fact that you are building something to better someone else. Money is just a byproduct of that interaction. At the same time, just because your product fits the needs of one group doesn’t mean that it will suit the rest of your customers. Learning how to qualify feedback is essential.
#6 If You Build it, They Won’t Come
While you’re listening to the needs of your potential customers, thorough research is also necessary to come up with a clear marketing strategy. Just as most entrepreneurs feel that they have a beautiful idea for business, most also think that their product will sell itself. Nothing could be further from the truth. Let’s say, for example, you own a venue where you are planning to host a big, ambitious variety show with music, food, and even some original artwork. You offer tickets to the public and put up a flier across social media to advertise it. Is that all you need to do? Who is your target audience? What is the average income of those you’re selling it to? What kinds of shows do they typically attend, and why would they take time out of their day to come to yours? The best marketing strategy will be different for every business. Some will benefit most from content marketing, while others will rely heavily on SEM (PPC and Paid Search Marketing). The key is to test multiple strategies and to tune your efforts as you grow. Sales and marketing is a grind, and those who are willing to go out and hustle for business will be the most successful, the fastest.
#7 Unrealistic Assumptions of Market Size and Target Customers
If you want anyone to take you seriously, then you need to have a realistic understanding of both your target customer and the real size of the market. Say you’re pitching to investors a mobile app that you claim will revolutionize texting, and you’re shocked when these seasoned investors roll their eyes as you explain that capturing just 1% of the 6.8 billion cell phone subscribers would give you 68,000,000 users. What you did not care to research is that only 58% of cell phone subscribers have a smartphone that can run your app, and only 68% of those users fall within the “general” demographic. When you get down to the actual target customer that will download your app, the market size is still impressive but far from 6.8 billion.
#8 False Projections of Your Financial Future
Now you need to ask yourself, “Where is the money coming from?” This is obviously a very basic element of starting a business, but too many entrepreneurs set out with hardly more than a little bit of startup capital and a prayer. Talkroute considered its financial options carefully during startup, and the best option was to bootstrap the company to revenue because it was clear that a proper team was in place that could bring the MVP (Minimum Viable Product) to market without the help of outside investment. Again, this route is not the best option for every company. Will you fund your business strictly from revenue, through crowdfunding, or through venture capital? Organizing an informed plan for your funding is vital, so that as you continue, you will have an at least relatively secure financial foundation.
#9 Striving for Perfect when Good is Sufficient
Many businesses fail because they refuse to release their product within a reasonable amount of time. A high priority for every new business should be to release the minimum product needed to achieve market validation and obtain feedback from paying customers, which is precisely why the MVP designation exists. Don’t over-stuff your new service. If you are focusing on features, then you are looking in the wrong direction because features do not build great companies. Understandably, you want your product or service to be perfect before you start showing it off, but consider your runway. Most business owners underestimate the amount of time that is needed to get traction for a new product, and they run out of money before they can cover ongoing expenses.
#10 Undervaluing Your Product
We all make this mistake. In the beginning, we underprice our product because we think that cheaper prices will translate to more customers. Wrong. If you provide great customer service and a convenient experience, most customers are willing to buy a more expensive product. In fact, price does not even make it to the top 5 of customer concerns. Underpricing also leads to a lower perceived value of your product, which may ultimately attract undesired customers who have a champagne taste on a beer budget. These bargain hunters are some of the hardest customers to please, and they are very demanding. You will also find that setting a higher price, within reason, will attract better customers who may not take your service seriously at a lower price. Furthermore, perceived value is important because the price you attach to your product reflects how good YOU think it is.
Although mistakes made while developing your business are useful to the learning process, you can save yourself a lot of time, money, and headache if you avoid a few of these big ones. The problem is that many new business owners, while admitting that they are unsure about how to grow, still believe that the way to approach business is the same way they intuitively approach everything else. It is not. As an entrepreneur, you may have to completely rewire your brain until your process becomes deliberate, studious, and efficient. The reason why some businesses succeed, while others fail, is no mystery. You will have to be honest with yourself about your goals, you will have to utilize strategy which is tried and true, and you will have to do your homework.