Having been an entrepreneur myself, and now as someone who supports and mentors entrepreneurs, I’ve seen many mistakes that entrepreneurs make, which I wish they had avoided. Building a new business is difficult enough in itself; these mistakes just make it harder. While you may have seen plenty of these ‘lists’, here’s my contribution:
Inadequate customer understanding
I’ve seen too many entrepreneurs who have only a fuzzy understanding of who their customer is, what their pain is, and how this product or service is going to be used. Based on a handful of conversations, they’ve made assumptions (often simplifying ones that justify the offering) and are blundering into product development and commercialisation. They’re then surprised when customers fail to put money down to buy.
Good entrepreneurs have a great sense of who their real customer is (segmenting the market and focusing sharply on a well-defined segment), what their real pain is, and how they are going to help. For these entrepreneurs, when their offering finally hits the market, it is like manna from heaven for the customer, and sales are relatively easy. As the old adage goes, you’ll learn more from one hour speaking to customers than you will in one month of market research.
As an entrepreneur, especially a social entrepreneur, you always have people who want to help. They help with advice, suggestions, and most importantly, introductions. I cannot overemphasise the power of these connections. You never know which connection will make a difference, so smart entrepreneurs make sure that they follow up diligently, and also give the person introducing them feedback and thanks later. This ensures that they tap into a wide network, and build lots of goodwill.
Unfortunately, I’ve seen too many entrepreneurs do a poor job of following up, and this creates a lot of ill-will in the process. It isn’t that hard! Make a to-do list and make sure that you’re ticking off most of those things during the week, and if not, work longer hours! But don’t ever burn bridges with people who are trying to help you by not following up. And always close the loop by giving the person making the introduction feedback on how the meeting went.
Poor documentation and role definition
How many times have we seen founding teams get together and in the rosy glow of the starting of a great venture, forget to agree on the basic elements of their partnership? Sooner or later, some founders get tired, distracted or are found wanting in the skills the others expected them to bring. What ensues is a nasty, bruising fight that wastes everyone’s time and could have easily been avoided. It’s easy enough to hammer out a basic agreement when you’re splitting founder’s common stock. Put vesting down for everyone. Make sure that everybody’s contribution is listed so that there’s no confusion. Everyone agrees that the organisation owns all IP. And always have a clear demarcation of authority: a team of equals is fine in some situations, but not what a corporate organisation needs.
Poor hiring decisions and reluctance to fire
In the rush to get things done, startups often hire the first somewhat eligible person they find. Only to later discover that the person’s cultural style didn’t fit the organisation, or he or she was better on paper. Take your time to hire, especially for key positions – planning your requirements in advance helps. In small organisations, the wrong person can poison the atmosphere quickly. Good people will begin to leave. And then you’ll have to fire the bad apple anyway. Avoid getting boxed in. The corollary to this is that sometimes startups take too long to recognise when someone’s not working out, and are reluctant to let people go. Entrepreneurs often don’t realise how unfair this is to the rest of the organisation. If someone’s not working out, do what is necessary. Give the person feedback and a chance, by all means. But don’t let things drag out ad infinitum.
Getting distracted easily
The beauty of start-ups is that they’re trying to do something new. Every possibility seems exciting. You get plenty of free advice on what you should be doing and how. If you don’t have a clear vision of what you want to be, especially in the short to medium term, you can get distracted by all the suggestions you’re getting. You feel bad to reject someone’s advice or fear that the person will feel insulted and bad-mouth you. So you end up trying to satisfy everyone; you end up pursuing each different opportunity that comes your way without adequate filtering. None of this is helpful. Your resources and bandwidth are scarce. If you don’t focus, you’ll end up with lots of half-baked projects and nothing that has got you to a point of sustainability. So listen to everyone by all means, but make sure that any decisions you’re taking are based on a clear and unified vision of what you want to do in the next 6-12-18 months. Figure out how to tell someone why you’re not acting on their suggestion. Finally if they feel hurt or vindictive, they have a problem; not you.
Entrepreneurship is a hard and lonely journey. Founders often make mistakes that complicate things that should be simple. I hope this list of common mistakes that I see will help you avoid them.