Common Startup Mistakes
Making mistakes is part of the process of building a company; quickly recovering from them is what’s most important. It’s all part of the adventure of entrepreneurship, which will require all of your stamina, drive and determination.
But your way forward is not entirely uncharted: When you notice an opportunity that has never occurred to anyone else, there are certain steps to turning your vision into reality. You must formulate an innovative business plan, find funding, hire the right people to carry out the plan, and then step back from your role in the business at exactly the right moment.
Let’s take a look at these steps, and also at ways to avoid some of the most common mistakes new entrepreneurs make.
But your way forward is not entirely uncharted: When you notice an opportunity that has never occurred to anyone else, there are certain steps to turning your vision into reality. You must formulate an innovative business plan, find funding, hire the right people to carry out the plan, and then step back from your role in the business at exactly the right moment.
Let’s take a look at these steps, and also at ways to avoid some of the most common mistakes new entrepreneurs make.
Step 1: Stay on Target
A mistake often associated with the first step is signaled by an entrepreneur’s inability to clearly and concisely convey his idea. You have to be able to generate buy-in from investors, partners and potential employees, so nail down your “elevator speech”—what you would say if you ran into an important potential investor in an elevator. Try to refine the essence of your concept into just 140 characters. Once you’ve done that, expand your message to a maximum of 500 characters. Remember, the shorter your pitch is, the clearer it will be.
An associated error is lack of focus. If your start-up has been tagged as “the next big thing,” the adrenaline rush that comes with building buzz can lead to impetuous decisions and a loss of a sense of purpose. Clearly define your goals, then establish a timeline.
Getting too far ahead of yourself is also dangerous. If your product or service is still on the drawing board, don’t get sidetracked by plans for future versions. Looking two or three years ahead is best, but the nature of your business and feedback from your investors will help you determine how far ahead you should plan.
A mistake often associated with the first step is signaled by an entrepreneur’s inability to clearly and concisely convey his idea. You have to be able to generate buy-in from investors, partners and potential employees, so nail down your “elevator speech”—what you would say if you ran into an important potential investor in an elevator. Try to refine the essence of your concept into just 140 characters. Once you’ve done that, expand your message to a maximum of 500 characters. Remember, the shorter your pitch is, the clearer it will be.
An associated error is lack of focus. If your start-up has been tagged as “the next big thing,” the adrenaline rush that comes with building buzz can lead to impetuous decisions and a loss of a sense of purpose. Clearly define your goals, then establish a timeline.
Getting too far ahead of yourself is also dangerous. If your product or service is still on the drawing board, don’t get sidetracked by plans for future versions. Looking two or three years ahead is best, but the nature of your business and feedback from your investors will help you determine how far ahead you should plan.
Step 2: Be Realistic About Costs
Don’t shortchange your start-up when estimating the funds you’ll require. Keeping expenses under control is vital, but don’t confuse capitalization with costs.
Don’t shortchange your start-up when estimating the funds you’ll require. Keeping expenses under control is vital, but don’t confuse capitalization with costs.
Step 3: Hire People You Need, Not Like
As tempting as it may be to staff your new business with friends and relatives, this is likely to be a serious mistake. If they don’t work out, asking them to leave will be very tough. Take full advantage of the knowledge pool you’ve created; when a problem comes up, remember nobody has all the answers, including you. One of your goals should be to find a manager who shares your vision, and to whom you can someday confidently hand the reins to carry out the next step.
As tempting as it may be to staff your new business with friends and relatives, this is likely to be a serious mistake. If they don’t work out, asking them to leave will be very tough. Take full advantage of the knowledge pool you’ve created; when a problem comes up, remember nobody has all the answers, including you. One of your goals should be to find a manager who shares your vision, and to whom you can someday confidently hand the reins to carry out the next step.
Step 4: Know When to Say Goodbye
A great entrepreneur knows when it’s time to leave the CEO role. It’s seldom easy, but it has to be done: few entrepreneurs make great managers. In my case, managing the daily operations of a business simply isn’t in my DNA. Stepping back doesn’t mean turning your back on your business. Founders shouldn’t hesitate to re-insert themselves into their businesses when necessary—look at Larry Page, who temporarily returned to the CEO role at Google in April.
A great entrepreneur knows when it’s time to leave the CEO role. It’s seldom easy, but it has to be done: few entrepreneurs make great managers. In my case, managing the daily operations of a business simply isn’t in my DNA. Stepping back doesn’t mean turning your back on your business. Founders shouldn’t hesitate to re-insert themselves into their businesses when necessary—look at Larry Page, who temporarily returned to the CEO role at Google in April.
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