Entrepreneurship is like riding a bicycle. You are going to fall and get hurt before you learn to do it right. Having recently attended an event on common mistakes made by entrepreneurs, I thought you would benefit from learning some of the lessons from people who got it wrong the first time.
1. We have no competition– if that’s really the case, perhaps you’re in the wrong business.
2. Our idea is complicated but people will get it – test yourself and ask 5 people before you make that assumption.
3. My advisory board matters – if you mention you’re advisors too much, there’s something wrong with the team.
4. My business plan may not lead to a profitable business but it has significant value to strategic acquirers– consistent cash flows are the most important thing to investors. Don’t count on Google or anyone to buy your business.
5. I’ve told my friends about my business and they all think its great– they are your friends. Off course they think it’s great. Get out there and ask potential customers.
6. I have great technology and it’s patented – its not a science competition- if a start up talks about their patents too much, something must be weak about with the product.
7. The funding source isn’t important – with the time it takes to raise money it is worth getting the right investors rather than getting stuck in a ‘bad marriage’
8. The market is huge, 1% will be my customers – dominate a small market rather thank taking a small piece in a big market. Choose a niche and own it.
9. I don’t want to share my idea because someone might steal it – the benefit of sharing is greater than detriment- investors won’t sign an NDA.
10. I can hire someone else to make sales – It has to be the founders for a while, don’t hurry to hire a salesman.
11. We can give the company away for now and charge for it later – if you are creating value for the customer, get paid for it!
12. The idea is working for another company – first mover advantage is underestimated, if you want to be a ‘fast follower’ beware of the consequences.
13. It is important that I get the business plan exactly right, instead of spending time with customers – wrong. Listening to customers is the best thing you can do in the early stages of your venture.
14. We have the best team in the world – be confident enough to assess the talent gaps in your team and openly communicate it to your investor. They can probably help.
15. It is riskier to start or join a new company than to work in a company – risk is everywhere, the only shot you have 100% chance to miss is the one you didn’t take.
Special thanks to Mark Gerson for sharing his insights.