Avoid these common pitfalls and accelerate your personal growth.
When you’re starting a small business, mistakes are inevitable. After all, getting a company off the ground takes a lot of hard work, hustle, and know-how. Problem is, most entrepreneurs don’t possess these skills when they’re just starting out. That means that in addition to having a great business idea, entrepreneurs must also deal with the hazards of learning on the job.
“I think the sign of a good entrepreneur is the ability to spot your mistakes, correct quickly and not repeat the mistakes,” says Mark Suster, two-time startup veteran and venture capitalist at Upfront Ventures.
While it’s true you can’t avoid all the pitfalls of being new to the startup game, you can avoid a great deal of them by learning from those who have come before you.
Avoid These Common Entrepreneur Pitfalls
You’re unrealistic. Congratulations–you’ve got a great business idea! It’s going to change the world. Revolutionize the–wait a minute. Take a step back. Is it?
Having a great idea is an amazing feeling, but it can also produce a lot of assumptions about the market and its need for your product. Resist the urge to fall victim to your excitement and analyze the opportunity as a whole–how significant is it? Would people pay for your product right now? Ask yourself these important questions before you throw yourself into building your product or service.
You never talk to your customers. Unfortunately, most businesses aren’t spending enough time doing customer development. But building a product in a vacuum–without insight or feedback from your target–is a recipe for disaster. And, according to Patrick Campbell from Price Intelligently, simply running multi-variate and A/B tests isn’t going to cut it.
“Aside from the fact that most companies can’t get proper volume to accurately run most tests, the data indicates we’re not running nearly enough tests to justify not talking to customers.” – Patrick Campbell
Even if you don’t currently have customers, you can still do customer development. Find them on LinkedIn, Twitter, or go old-school and find people to talk to by posting on Craigslist. Go talk to those people. Ask them if they’d jump on a short call (15-20 minutes is fine) and:
- Tell them about why you’re doing customer research
- Ask them what pain points they have with current products in the space
- Find out what would help them solve those problems
Document your learnings and refine your product idea based on the real problems people have, not your imaginary assessment of them.
You buy into hype. Don Charlton was one of the first-to-market with Jazz, recruiting software that focuses on simplifying the hiring process. His early growth made him a target for the “hype men and women” that urged him to focus on aspects of his business he didn’t find high priority.
“Don’t be influenced by those people who want to ride the wave,” Charlton says, referring to hyper-growth.
Instead, focus on finding product-market fit and growing your customer base with people who are driving demand for your product or service. Pursue steady growth versus so-called “overnight” success.
You don’t protect your intellectual property. In the early days of getting your business off the ground, you may enlist the help of friends or contractors to work on your product or give you advice. This is great–but only if you protect your intellectual property, which means doing two important things:
- Avoid an unintentional partnership, whereby the parties you enlist for help may misinterpret the situation as an actual business partnership. This is problematic because the work they complete for you can’t be designated as “work for hire”–that is, belonging to the company and not the individual who completed the work.
- Decide whether you want to form a limited liability corporation (LLC) or incorporate your business. This way, any freelance or outside assistance you receive can be treated as “work for hire” through a contractor agreement.
Another option would be to avoid getting helping from family or friends entirely, but that’s often unrealistic. But a few steps in advance to formalize the process makes it safe to accept their help while still protecting your business.
You’re afraid to fail. As Eric Ries says, failure is essential to learning. If you view it as an opportunity to become a better entrepreneur, you’ll grow more comfortable with the feelings associated with making a mistake, while also getting a better understanding of how to improve.
You’re careless with seed funding. When you’re just starting your business, you’ll likely seek investment. If you’re lucky enough to raise a nice seed round, be strategic about how you spend it. That means hitting important milestones that demonstrate progress. This way, as entrepreneur and 500 Startups Partner Elizabeth Yin points out, you’ll have something to point to when the time comes to raise another round.
“Most entrepreneurs understand on some level that fundraising is all about messaging. But, most people only think about this in the context of storytelling. But, messaging how much you are raising and for what specific milestones are equally important. “ – Elizabeth Yin
You forget about company culture. When entrepreneurs are just starting out, there’s a sense of urgency about everything, and that’s awesome. But in pursuit of product development and business growth, nurture culture at every stage.
“Culture is more important than your product ever will be. Focus on it early and be willing to spend time and money to nurture it,” advises start-up veteran David Hauser.
Mistakes As Opportunities for Personal and Professional Growth
Mistakes are an interesting phenomenon: Everyone entrepreneur makes them, but some people seem to leverage them to their advantage, while others are destroyed by them. Why is that? It might be the story we tell ourselves about what our mistakes mean. If we view them as indications we’re not worthy of success, then mistakes can easily lead to our demise. If, however, we view them as essential stepping stones to achievement, then we give ourselves the power to make them a part of our entrepreneurial narrative.