Common Mistakes That New Entrepreneurs Make
Joshua Davidson wrote this article
We are incredibly fortunate at Chop Dawg to work with such amazing entrepreneurs – individuals who are, more often than not, fully prepared for what it will take to turn from an everyday civilian into a full-time entrepreneur. It isn’t an easy transformation. It is one that consists of wearing many hats, dealing with a lot of heartaches, too much anguish, and the potential upside of high rewards.
One of the things that we have noticed while operating our company over the past six years, is that you can often predict the typical mistakes that new entrepreneurs make. Though it varies for the individual, one thing is almost always evident – most entrepreneurs are focused on their product, and often need to be reminded to take a step back, review the entire company and upcoming operations before entering the market. Often times, we help our clients with this, and hopefully this blog post can help individuals that haven’t worked with us the same way.
1) Tunnel-vision between their product and execution
As evident above, most entrepreneurs are focused on one thing, and one thing only in the early stages – building the best damn product possible. It makes complete sense. This is the reason that you are going to become an entrepreneur. This is why you’re pouring your heart and soul into something. This is where you are putting your money and livelihood on the line, and your reputation is at stake.
Here is the biggest issue. Your product is everything. You can have the best product in the world, but if you cannot sell it, or worse, you don’t have a foundation to properly control your product – it doesn’t matter how good your product will be.
We have to remind our clients often that all of the other pieces that deal with entrepreneurship come into play too. You need to consider how your company will be setup. How your brand will tell your story. How you will generate revenue. How you will scale. How you will put together a team to get your company to the next level. How to pitch to the media. How to protect yourself. How to become a better entrepreneur.
A great example is the original Macintosh computers sold at Apple. Apple realized that up until this point, the personal computer was something that was intimidating to the general public. Imagery of big, hard-to-use, expensive machinery popped into the minds of millions. Apple realized that in order for them to properly execute, they needed to market their product to be easily understood, and easily adaptable. They completely changed the way packaging and presentation of a computer worked.
Continue to always review every single aspect of your business. Your business is a living, breathing, moving animal – not something that will be controllable in black and white. Pay attention to the gray, constantly be improving, and tracking. Don’t get stuck in product tunnel-vision.
2) Forgetting about their audience and instead thinking about themselves
Following the theme of product first – often enough, most individuals that reach out to us at Chop Dawg are trying to build a product that solves a problem that they have personally faced. It makes perfect sense. Some of the biggest companies in the world were created because someone needed to scratch an itch, and believed they could solve a problem better than anybody else had done it before.
What happens though, is during the product development process, more times than not, you’re facing months of hard work. This doesn’t even include the actual planning process that can often last months, if not years prior to breaking ground. Over time, that initial concept of solving a problem becomes much more. You realize the grand vision, where you can go, the problems you can solve, the verticals you can attack, the audiences you will reach. Without realizing it, you have lost sight of your audience and why you were building what you intended to in the first place.
We recommend that you keep things simple at the start. Build a product that can be easily validated and monetized early. Remind yourself that overwhelming, even if your grand vision is great, is a negative at the early-stages. You need to solve a problem, build a brand, establish trust, and start growing a customer base first. The worst thing in the world is to lose sight of the shore, thinking you are heading the right direction, when in reality, you’re getting more lost at sea. Always maintain perspective of why you started your entrepreneurial venture in the first place.
3) Neglecting legal and insurance until it is too late
This is a big one. One of the biggest pieces of advice that I was ever told was, address the things early on that will otherwise keep you up at night. Legal and insurance, are more often than not, the two that translate well to everyone.
Entrepreneurs do not realize that if you give yourself a liability, once it is there, it is always there. You can address it later on, but you left yourself open forever. Before your company ever launches, ensure the proper foundation has been laid. Make sure you have the right team in place, and above-all, educate yourself on the subject when it comes to legal protection of your business and proper coverage through insurance. Every business is different, but they always need the same two things – an attorney and an insurance company.
4) Not accounting for all of the operational costs that come up once launched
Continuing from above where many times, new entrepreneurs do not realize they will need an attorney and an insurance company early-on, these things account for some of the expenses you will need to worry about after a product has launched. Again, as a tunnel-vision focused entrepreneur early-on as most are, you do not comprehend all of the things that go into starting a new company.
Truly break it down for a minute. Launching an application? How about the yearly costs to being on the App Store? How about an SSL Certificate to encrypt your data? How about server costs? How about the costs for a private IP address? How about licenses for fonts and stock photography? Paying for a content writer? Advertising after launch? Business registration fees?
This isn’t meant to overwhelm you, but to be upfront – entrepreneurs sometimes do not realize that the cost for entry into the entrepreneurial world is more than just building a product. The cost of running a business is, quite often, multiple different costs for critical things to operate. Take account of them early, and address them early-on before your launch. The sooner you get them out of the way, the more you can then focus on what is most important – building the best product possible and getting users hooked on your product.
5) Focusing on the wrong customer/user feedback
The last advice is that soon after you launch – early adapters love to do one thing, give their two cents. One of the things you start to realize is that everyone has different feedback, and as an entrepreneur, you will be invested in addressing all of the feedback given. This is the worst rookie mistake of them all.
Here is my best advice to give, sit on any advice given for three months. Take away all emotions from it, and instead, locate trends in advice over time. Trends will show you true, honest feedback on how to improve your company. If you take it per advice given, most times, people give advice just because they want to feel important, or worse, you take it at face-value because every piece of advice given early on matters. Collect them all, thank everyone who takes the time out of their day to give you advice, but be methodical. Use what is most common, what makes most sense, and remain even keel for all advice given.
Avoiding these mistakes early will give you a competitive advantage over another new entrepreneur who makes these mistakes. This isn’t to suggest that if you didn’t read this article you would make them all – but following the information above about noticing trends with feedback, we have noticed a trend with these five common mistakes of entrepreneurs that can potentially cost thousands in unexpected expenses, unnecessary stress, and most concerning – shutting down a new business. Address these early on, address them at the highest possible quality, and nip them in the bud. You have more important things to focus on anyway.