The 13 Worst Mistakes Entrepreneurs Make
There are many mistakes you can make as an entrepreneur: marketing mistakes, decision-making mistakes, technology mistakes, and so much more.
But there are mistakes that slow you down and ones that can stop you dead in your tracks. A recent discussion on Quora focused on the unavoidable mistakes that new entrepreneurs often make. There were many good suggests from businesspeople who chimed in. Here are 13 that were particularly insightful and sticky.
Hide from problems
When things go wrong, what you absolutely, positively, without a doubt should not do is hide. Only when you face the issues do you have a chance of finding solutions. That also means to avoid pretending that all is well with investors and staff. They can often be helpful, so why not let them?
Be all things to all potential customers
You can never please all the people all the time. One implication is that you will never develop a product or service that is attractive to the entire market, let alone all people. Don’t bother. Focus on what you can do for a particular subset.
Try to do too much at the start
You want a product or service that will startle everyone and draw buyers. It’s understandable, but there’s a tradeoff. If you spend too much time chasing perfection, you won’t have the time to chase customers, allowing a competitor to slip in with a product that may not be as amazing, but that has the advantage of being available for purchase.
Ignore the answers you get to the questions you ask
You will (or should) talk frequently to staff, investors, vendors, prospects, and customers. They can offer great insights and advice that can improve your business. But that only happens when you actually listen to what they say and not dismiss it. Not that you should automatically do what everyone tells you, but if you dismiss anything that doesn’t immediately agree with your assumptions, you’re going to tank your business.
Slavishly copy a successful startup
You’ve seen the new tech company, restaurant concept, consumer product, or some other successful new business. It’s an enormous mistake to try to copy what you just saw. You will have different abilities, resources, ideas, and opportunities. If you can’t significantly improve the idea, do something else. Why start off as an also-ran?
Think that great products are enough to succeed
Ralph Waldo Emerson was wrong. Build a better mousetrap and the world will not beat a path to your door. You need to create a strong business, learn to market, and handle problems. Only a fully-developed company will succeed. A great product alone is likely to fade into obscurity.
Skip the proof of concept
You’re sure that you know what people want. Of course you do. But what if you’re wrong? Unthinkable, of course, but it’s all too possible. Rather than assume your omniscience, test your ideas. Better to find and fix the problems at the start so you can proceed more smoothly and successfully.
Rush to economies of scale
You want your business to be a blockbuster. But don’t plan on it. Building an infrastructure and hiring the people necessary for a big rollout is a mistake if you do that too early because you’ll burn through resources before you can justify the expense. Catching up to growth is painful, but never catching up to capacity is much worse.
Stay fixed on your vision
Entrepreneurs are often passionate about their concepts and plans. That doesn’t mean the world is. People may react differently than you expected. Changing circumstances might close some doors or open others. Adapt your idea as necessary to make the business work.
Run out of cash
Money is the blood of your company. If you don’t cut expenses wherever possible without threatening the quality of your products or operations, you open a corporate vein and bleed onto the floor. Forget the fancy office or perks. The more money you save, the more time you have to get things right and see the business blossom.
Work out the details with co-founders later
You go into business with a partner, maybe an old friend, and suddenly things don’t work the way you expected. Someone isn’t putting in the effort or can’t get the necessary results. If you haven’t considered such issues as a parting of the ways, who has the final say on decisions, or how or when you cash out, then you are an accident waiting to happen. Get the details straight at the beginning.
Hiring the easy gets
Hiring is a painful and expensive undertaking. You meet people who seem to be matches and so want to bring them on. Resist and create a real HR process. Evaluate and vet candidates, and get the types of expertise, both technical and managerial, your company will need.
Be satisfied with basic financial data
A bookkeeper and a copy of QuickBooks is not a financial system. If your intent is to make the company grow, you need accounting that is complaint with generally accepted accounting principles, or GAAP, as that’s what investors, acquiring companies, or the stock market will expect. Set it up right from the beginning. In addition, work out what metrics will be most important to various aspects of the business and generate those numbers. Know the incremental cost of an additional product unit, how expensive it is to acquire a news customer, the average customer’s lifetime value, or whatever else might make a difference to how you make decisions.