The entrepreneur’s journey
Navigating the business start-up process, through funding and foundation building, into a high growth stage and to a potential exit, is a journey wrought with challenges. Every experience is unique – just as every founder is unique – but there are common mistakes we see throughout history. Understanding these pitfalls will help entrepreneurs overcome and avoid them. Knowing might not be half the battle, but it is a great start.
Below are five common mistakes that are repeated throughout the start-up world. Depending on how founders avoid and/or handle them can be the difference between a breakout business… and one that never realizes its potential.
1. Stay focused. A clean slate and a world of potential opportunity tempt young companies. Multiple customer segments seem within reach and diverse strategic partnership options promise to accelerate growth and open up new revenue, to name a few. Entrepreneurs need to stay focused on the company’s mission and strengths, though, and not chase every opportunity. Do one thing very well and not lots of things in a mediocre manner. A laser-focused approach almost always delivers a better customer experience, smarter decisions and a more successful company. Down the road, when the company has more resources, additional business opportunities can be built into the strategic plan.
2. Don’t daydream. Many founders see rival companies getting bought for millions and hear wonderful stories across their networks about big exits. Don’t focus on the exit. It’s the journey that counts. There is no substitute for hard work, customer focus and smart ideas. Selling a company is hard, and there aren’t many shortcuts (if any). Yes, your big exit can happen, but it won’t happen by dreaming. You have to grind it out.
3. Don’t be stingy. Many founders are very focused on minimizing the equity they give to key employees and partners as a business is starting up. It is a big mistake to concentrate too much on equity percentages as a business is in its infancy. Being generous, for the right people and in the right circumstances, almost always pays dividends. As a business grows, of course the compensation becomes more regimented and less equity is given. At the beginning, though, provide a big incentive for your team, and yes even at the cost of your own percentage. The theory is that 50% of a strong exit is a hell of a lot more than 90% of nothing.
4. Stay focused on your customers. As businesses grow, and add smart people with good ideas, the focus often shifts from the customer to internal developments. Founders and employees fall in love with technology projects, new streamlined business models and/or the new really cool website being designed by an expensive firm that previously was unaffordable. The commitment to customers, and what those customers find most important, can be overlooked. Don’t let it be. Your customers are and always will be the most important part of your business, and you need to make sure that your business remains focused on them.
5. Know your limits. Entrepreneurs are used to doing everything, to trusting themselves and no one else, and to making all business decisions. The time when a founder has to give up some control is often the most difficult inflection point in a business. This can mean handing over the CEO reigns to a more seasoned executive, but it does not have to mean giving up control. In all situations, though, entrepreneurs have to start to trust others. Bring in sales, finance, technology and/or operations talent and trust it. There are people with more skill and/or experience in some areas and they are needed to accelerate growth and add security for the business. Founders need to focus on what they do best, even if it means stepping back.
It is amazing how often in our world people forget or ignore the past, and history repeats itself. From bubble economies to fallen empires, it seems inconceivable yet it keeps happening. The start-up world is no different. These mistakes happen every day, even to many of the smartest and best entrepreneurs in the world. Businesses that can avoid them are taking a big step towards success.
As always I look forward to your feedback. Have I missed any common mistakes that you have seen repeated in the start-up world?
