Most entrepreneurs are familiar with the ridiculously high percentage of startup companies that will fail in the first couple of years. The business owners who survived the odds will tell you that they didn’t achieve success on sheer passion alone. It took hard work, and in most situations, it didn’t happen overnight. Don’t ignore the startup companies’ cardinal sins.
Studies show that over 90% of startups fail. Even for those rare few that make it big, life doesn’t get much easier.
In fact, only slightly more than 10% of the firms on the original Fortune 500 list are still in business today. Making an enterprise successful and keeping it that way is a staggeringly hard thing to do.
So it’s not hard to see why there has been so much effort devoted to narrowing down a company’s performance to a single factor. Some say that focusing on the customer is key.
Keep reading: Is Your Small Business Coping With Technological Change?
After spending the last 6+ years running my own business consulting for companies and corporations, it seems I have witnessed them all.
If you do not change direction, you may end up where you are heading.
Lao Tzu
And if it is the wrong direction, you need to change direction, yes? In today’s world, if you want to be successful in business or as a business entrepreneur, there is certainly a continuous ‘evolutionary’ process that we must all undertake.
In other words, there are mistakes entrepreneurs should avoid making multiple times. We must practice, learn and re-learn the correct ways to thrive in today’s business world. As our business environment changes, we need to be able to adapt those skills to our surroundings or be left behind.
Every entrepreneur dreams of having that single moment of epiphany where everything falls into place. Many search for their entire careers for that one big idea that will make the difference between incredible success and frustrating mediocrity. Few ever find it and many that do end up crashing and burning along the way.
The truth is that innovation is rarely a single event and the “eureka moment” is largely a myth. Innovation involves combinations, so it’s less a matter of coming up with a big idea that it is putting the right ideas together in order to solve a meaningful problem. That’s a process, not a moment.
That’s why instead of starting with an idea, it’s best to start by identifying a great problem. Innovation is far more complex than most people give it credit for. It takes more than an idea to change the world. In fact, it often takes a great amount of time after a breakthrough for its impact to become clear. Innovation is an integrated process of exploration, iteration, and execution.
Here are the most common mistakes I’ve seen newbie entrepreneurs (and even some the experts) make with alarming consistency.
Startup companies … too much fear of failure
Having some fear of failure keeps you healthy. Too much fear is just the opposite. Remove fear rather than fearing mistakes to the point that you avoid or delay decisions. This is very difficult for some people to master.
Not having fun
You won’t find this mistake on many lists because many people would not consider it a skill. We not only consider it a skill (fun doesn’t often happen without working at it!). We consider it so fundamental to all the other skills on the list that it is our top priority.
The corollary to this skill must be mastered as well … when you dislike something, stop doing it.
Decision paralysis
No one can deny that the ability to make decisions is a core skill that every business person must possess if he or she wants to be successful.
Decisions on how to proceed with marketing, funding, product production (in some cases), vendor selection, and a host of other judgments need to be made.
The key is to do your homework quickly, make the decision, and adjust as required. Of course, you should always focus on learning from mistakes.
Dislike dealing with people
It’s often said that no matter what business you’re in, you’re in the people business. How true that is!
Whether dealing with customers, vendors, investors, the press, or employees, continuously developing your people’s abilities can mean the difference between success and failure.
Being too conservative
Don’t settle for the ordinary or the mundane, even if it means a little controversy. Don’t be afraid of ticking someone off.
Make those around you think. Too much change and adaptation are better than none or not enough.
Afraid of asking for help
Find an experienced entrepreneur like a mentor to help and guide you and don’t be afraid to ask for help.
Listen to feedback from your mentor and others. Sure, you’ll get some bad inputs, but learn to filter.
Inability to innovate
Car models change every year because customers want something different. This is true in all industries.
Be sure never to stop innovating on your business processes … be creative and try new ideas. Never neglect your staff in these activities.
Inability to anticipate
Being able to project into the future and build a plan to accomplish your objectives is a skill that can take any entrepreneur far. Effective planning is what will guide your business and ultimately define what you’re all about.
The skilled business planner knows that planning is only an effective skill when combined with action. It prevents not getting bogged down in planning rather plan with flexibility in mind.
Don’t exclude anticipation and strong time planning here, as without it; little else can be planned well.
Startup business cardinal sins … not decisive
The Nike slogan is not just for sportswear. Stop sitting around talking about your ‘great idea’. Get out there and pursue it. As Wayne Gretzky said, ‘You miss 100 percent of the shots you don’t take’. So take your shots.
Afraid of asking for help
Find an experienced entrepreneur like a mentor to help and guide you. Don’t be afraid to ask for help. Listen to feedback from your mentor and others. Sure, you’ll get some bad inputs, but learn to filter.
Little attention to time management
This includes constant email monitoring, meeting just to meet, having in-person chats when phone or Skype will work. Your time is very valuable, make the most of it.
Weak communication skills
If ever the term ‘last but not least’ was appropriate, this is it. The skill of communication (all forms) plays a role in the execution of all of the other skills above. If you don’t have this skill, none of the other skills will be fully developed, no matter how hard you try.
Lacking evaluation of the business model
Not everyone incorporates a business model into their planning. It’s so easy to get lathered up around the concept of your business. It’s quite another thing to put pen to paper to help you objectively evaluate your overall business model and its profit potential.
The simple truth is that having a great idea is just a start. It doesn’t necessarily translate into a profitable model.
Tip: Consider SCORE or a small-business development center to evaluate the business model and offer expert advice. Their perspective could identify a more viable structure. This makes better business sense than what you’ve already established.
Not enough cash reserves
I believe that one of the reasons why so many small businesses fail within the first few years is NOT because the business model isn’t viable.
Nor is it that the entrepreneur isn’t “good enough” to make the business work. In reality, the financial ramp up time is a firm fact of life of the startup.
Most entrepreneurs simply run out of money to support the business and themselves before the business is profitable enough to sustain itself.
Tip: Proactively set up a special fund intended to support yourself during the business startup phase. Be conscious of what you put into this fund. You may want to strive for an amount that can fully support you for a year or two to relieve pressure as you ramp up.
Too ambitious
Marketing or advertising, you need to create information that your customers find interesting and worth talking about and remembering. If the information is ambiguous, it certainly won’t be remembered.
Showing no originality in a value proposition
Don’t present material that overwhelms people with sameness. Unique messaging grabs attention much more readily. You only have a few moments to communicate, so use powerful, focused and simple words – such as ‘free,’ ‘unbelievable,’ etc.
Overly optimistic assumptions
I see so many newbie entrepreneurs fall into this trap. They had a great idea and convinced their friends and family that it’s a no brainer. They jump into the fray only to realize there were a few not-so-little details. They failed to consider the few areas where their assumptions were overly optimistic. Before they know it, “no-brainer” business is hanging by a thread.
Be honest with yourself. Are you underestimating the time required to get the first client? Are you overestimating the demand for the product? Are you assuming zero risks by not allowing for what could go wrong?
Tip: Find three to five completely objective people (not friends or family) to play devil’s advocate. Let them help identify vulnerabilities and then take steps to mitigate those.
Limited evaluation of the business model
Not everyone incorporates a business model into their planning. It’s so easy to get lathered up around the concept of your business. It’s quite another thing to put pen to paper to help you objectively evaluate your overall business model and its profit potential.
The simple truth is that having a great idea is just a start. It doesn’t necessarily translate into a profitable model.
Tip: Consider SCORE or a small-business development center to evaluate the business model and offer expert advice. Their perspective could identify a more viable structure that makes better business sense than what you’ve already established.
Doing everything yourself
Want to save money? If you try to do EVERYTHING yourself, you’ll only run yourself into the ground. Your business will suffer because you don’t bring sufficient expertise in every area.
Your time is money. Think about where you must personally invest your energies. Should you be developing and refining your content, products, and services, cultivating relationships with key clients and stakeholders? Should you be developing credibility within your industry? No one can do this for you.
That said, others can develop your website, handle your public relations, develop templates for your newsletters, make trips to printers and copiers and perform random administrative functions. Utilize them.
Tip: The key is identifying what to outsource and what to keep. A good rule of thumb is if it’s not part of the core competency, you have little expertise in the area, consider outsourcing.
Not being fully committed
Are you willing to work like a dog during the early days? I’m amazed how often I run into people who’ve recently launched their businesses. They seem shocked that they’re not making six figures while working a 25-hour workweek.
They seem to have this glamorous view of entrepreneurship where they get to start at the top and skip all the hard work. The simple truth is if you want to make it, most startup businesses have to hustle early on.
This might mean working another job while you’re starting your business, volunteering or doing some work for free to gain experience and exposure. It also may mean working nights and weekends.
Tip: Before jumping into the startup world, really evaluate your current lifestyle. Realize you will most likely be given up a huge chunk of your free time.
No growth strategy
We all know of a restaurant that was great when it first opened but after expanding the food or service went downhill. They then developed a bad reputation and eventually closed. Don’t be that business.
While most small businesses think the goal is to win as much business as they can, this isn’t necessarily true. Sometimes, you can attract too much business. Then you have a completely different challenge that could threaten the long term viability of the business completely.
Tip: Think about how you want to grow and develop a high-level growth strategy fairly early on (even if it changes as time progresses).
The bottom line
I’m not as much surprised as saddened that such nutty beliefs and misconceptions that entrepreneurs can squander their effort, money, and patience.
I’m sure there are binders full of the rationale for why it’s stunningly brilliant stuff, and there’ll be metrics that declare the spot a wild success. But believing those arguments, or valuing those outcomes, requires that you swallow the message hook line and sinker. Not me.
What do you think?
Heard enough? I rest my case.
