Business Strategy
Avoid These 5 Critical Mistakes
Some mistakes that entrepreneurs make are easily forgettable and are not critical to the long-term success of the firm, but other common mistakes that entrepreneurs make can have a profound impact on the success of the company.
When starting your own business, there are five significant mistakes that you should be aware of and avoid at all costs.
This list, of course, does not include all of the mistakes that can be made, but they are substantial enough that they can have a profound negative impact on the long-term success of your company.
1. Creating a Solution For Which There is No Problem
The common conundrum of "if I build it they will come" has duped many entrepreneurs. Focusing on your solution before you truly understand your customers' needs, wants, or their problems, is always going to be a recipe for disaster. Great businesses are started by identifying a better way to meet a customer's needs, not by building a mousetrap just because it can be built.
2. Choosing the Wrong Business Partners
Your business partners will be critical to your success as you are dependent on them and they on you. Your founding business team should compliment each other and preferably each have a different background to (e.g. finance, marketing, and IT) to meet your businesses needs. The more complimentary your business team is, the easier you will see how much more efficient your startup can be.
3. Expect and Plan for Venture Capital
Unless your business can achieve over $50 million in revenue and requires a lot of capital to get to breakeven, you're better off bootstrapping your startup until you can get it off the ground and prove your business model is sustainable. Venture capitalists will invest in smaller start-ups that have shown progress on their own, but rarely will they invest from day one on a small start-up that does not have the potential to reach massive scale. The time you spend trying to raise venture capital is time lost working and growing your business. Only a small percentage of firms that seek venture capital actually receive it, so use your time wisely and have your ducks in a row if you decide that you cannot move forward with out venture capital.
4. Be Everything to Everyone
The core to any successful competitive strategy is finding a unique position within a market and actively deciding what you will not be. As a startup, your resources and time are limited and you must choose a focus that allows you to generate a concentration effect by being the best in a given market segment or serving a specific customer. Trying to offer too many solutions or products to too many customers will allow other competitors to serve your customers better and will dilute your efforts across too many channels.
5. Try to Do Everything Yourself
No entrepreneur has succeeded because he could do everything by himself. Entrepreneurship is more than just knowing how to do something, it is about motivating a team to move in the same direction and accomplishing the things required in order to create value within a market. Sound management is just as critical, if not more critical then your business idea and business plan.
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