The six most common mistakes entrepreneurs make that are easily avoidable
There is a 90% failure rate for startups.
People have an idea, they create their business but then close shop the following year. The crazy thing is that they all “have an awesome idea”.
Now, there are a lot of variables in the business environment which can affect your chances of success but I am going to share with you six mistakes you can avoid that are within your control.
1. Not validating risky assumptions
This is THE BIGGEST MISTAKE, entrepreneurs that don't validate assumptions have the highest failure rate. But it's not their fault. At business school, we get taught that the first thing we should do is write a business plan.
The problem is that these are based purely on assumptions with a high level of uncertainty. Without validating assumptions, you will likely build a product that is entirely out of touch with what people want and your business model won’t be the right fit with what you are looking to accomplish.
Even large companies are known to make huge stuff ups by not validating their assumptions. There are many products that have been built by some of the smartest people however, they never succeeded as they build the wrong product right from the start.
Please, please, please write down your assumptions, make a list and figure out how you can validate or invalidate them.
2. Not asking the right questions
Many passionate people believe that what they are building is the right thing and their questions, (often just surveys, cringe) just look to reinforce that and leads them to build products and services that are just like all others or fail altogether.
Instead, you should start by asking your potential customers about their problems/ needs and find a solution on how you can solve it for them.
“It shouldn’t be can we build it but rather should we build it” -Ash Maurya
Focus on identifying a problem in the market and asking the right questions.
I’m repeating myself here but seriously, when you ask questions, be problem/ need focused (your customer’s needs) rather than solution focused (what you look build).
3. Don’t identify a problem to solve
The previous point brings us to this third point. Identify a problem that people are prepared to pay to have solved.
Find a problem that surfaces a ‘must have’ solution.
Rather than a "nice to have solution", a "must have solution" really offers entrepreneurs an opportunity to find a market that is willing to pay to have their problem solved. Failing to find a solid problem that people will pay for can lead you to create a product that is a hard sell and will take off very slowly - it may even have a long painful death.
Remember, you are looking to create a sustainable business model. Even if you are working on a social enterprise, you need to find a problem where people have funds to solve it. Funds could come in the way of sponsorship, donations or sales. The better the problem, the easier it will be to find revenue streams.
4. Don't try and do it alone
A lot of entrepreneurs try to do it all on their own. Entrepreneurs often hold their ideas very close to their heart and focus too much on non-disclosure agreements and protecting their potential IP.
Trying to go at it alone increases your chance of failure and potentially leaves you missing out on critical skills that you do not possess yourself.
Make sure that you've got the right team and the right expertise when you need them.
This is also a biggie for investors. If you choose to go down the funding route, most, if not all angel investment groups will expect a founding team.
Surround yourself with smart people. This can come in the form of a casual advisory board, a mentor/ coach or even a co-founder (this is your early team).
If you are in the early stages where money is tight, join communities of people going through the same stages, find meetups and reach out to others who have been in your shoes. I know this can be hard - which is why I have started the Selfstarters' StartSmarter Community, aimed at doing exactly that: to help each other grow and support each other.
5. Don’t commit sufficient time and money
Another common mistake is that entrepreneurs don’t commit enough time or resources.
As entrepreneurs, we often overestimate what we can achieve in the first year and underestimate what we can do long-term.
You need to understand how much time and how many resources you will need to start your business. Scope out the project, plan, understand your market and the solution.
It’s horrible when you start your project and you constantly get held up along the way while dragging your venture out over months.
6. Don’t focus on a narrow target market
The last mistake that entrepreneurs usually do is not focusing on a specific target market. Most business starters will always focus on creating a product for the mass market.
The conversation usually goes like this: “But everyone is my customer” My answer: NO, it's not.
You need to make sure that you focus on a specific target market and that you have a laser sharp sight on who your customers are. This will allow you to stand out from competitors and make your marketing and sales efforts go that much further through better pricing tactics and more specific messages for the market.
I will cover more of this later on. Targeting a niche is such a huge deal when you first start out and even when you are an established business.
Mistakes are an inevitable part in the path of your business. That doesn’t mean you need to repeat everybody else’s mistakes. Instead, learn from other people's mistakes and understand how you can avoid them.
Keep these mistakes in mind and you will definitely increase the success of your business and speed up your venture.