Sticking with one—and only one—idea for too long
While a single idea may be your catalyst
to entering a market, don’t be afraid to continue to explore new ideas
and options. Remain open-minded, and explore new ideas to see which ones
will pan out into feasible market opportunities.
Being product-driven, not customer-driven
In the world of capitalism, the customer
is king. Even if your product is faster, better, or stronger than the
competition’s, if it isn’t what your customers want, then they won’t buy
it. It’s that simple. And to know what your customers want, ask them!
Understanding what your customer wants and needs should be your number
one priority.
Thinking legal problems can be solved later on
Many important legal decisions must be
made early on. Neglecting to deal with these issues during the
appropriate stage can cripple a business. It’s important to hire a
competent lawyer with experience in working with entrepreneurs. He/she
can advise you on the next steps to take as you are growing your
business. It can be much more costly and time consuming to fix the legal
blunders you made unknowingly early on than to take care of them at the
outset.
Spending money before you make it
Cash is key in the early stages of a
business. Money owed to you only forecasts future cash flows. While you
may have a booming business with many customers, you cannot pay your
bills and staff without cash.
Not having a clear focus
Write a business plan early on, even if
it is only for your benefit. Set both short- and long-term goals for the
business, so you can check your progress along the way. Without a clear
vision of where your company is heading, your great idea can get
muddled along the way.
Catching key customer syndrome
Having that one large customer in the
beginning may be just what you need to get your business started. But
don’t rest on your laurels. Use that edge up to work on acquiring more
customers—large and small. Having one customer who generates more than
50 percent of the revenues can be a recipe for disaster if that customer
goes out of business or stops buying from you for some reason.
Performing inadequate market research
Entrepreneurs often overestimate the
size of their potential market. So be careful about defining your market
segment too broadly, and make sure to conduct sufficient research on
potential and exiting competitors. Ask relevant questions, such as: What
are potential customers buying now? What is their incentive to switch
to buying a new product? Is there enough market demand to support the
introduction of a new product?
Having too much overhead
Many startups fail due to overspending
on overhead. The best entrepreneurs know how to use their cash for
business-building processes, such as product research and development.
Think carefully before spending and remain focused on the bottom line.
Lacking experience
Your lack of experience in the industry
you are trying to enter can lead to many costly mistakes. Before trying
to launch a startup, gain experience in the field through an internship
or a related job. On-the-job experience is the best way to learn about a
business.
Maintaining equal partnerships
When starting a business, it can be
tempting to divide ownership equally among the partners and attempt to
make all decisions via consensus. But while partners may agree in the
early stages, disagreements will inevitably arise. Partners also often
have different ideas about how much time to put into the business.
Ensure that there is a defined leader with adequate authority to make
final decisions and sufficient compensation to remain motivated.
Source: mba.tuck.dartmouth.edu
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