Ten Common Misteps Entrepreneurs Make on Their Way to Market

It is the things we don't know, regardless of our intention, that often hinder our success as entrepreneurs. Here are ten of the most common missteps I've witnessed over the past decade while working with startup businesses.

by Terry Murray, Business Coach, Venice Fl

It is the things we don't know, regardless of our intention, that often hinder our success as entrepreneurs. Here are ten of the most common missteps I've witnessed over the past decade while working with startup businesses.

Having spent the past ten years working as a consultant and business coach for entrepreneurial endeavors and investor-driven startups I’ve witnessed a lot of mistakes really smart, highly motivated professionals make on their way to market.  When you sit back and examine them, they seem fairly obvious, but in the heat of the launch even the most seasoned entrepreneur can lose his or her perspective.  Here are some of the most common missteps I see, year after year:

  • Don’t fly by the seat of your pants.  You need a business plan.  Eight of the top reasons businesses fail, as identified by the Small Business Administration, can be traced back to the lack of sound, strategic business planning.  The ninth?  Inadequate business planning.  The value of planning is in the process itself.  It charges your vision with the positive energy of your intention.  When done well, it forces the entrepreneur to think through potential risks and develop contingencies.  It also provides a critical management tool for measuring and calibrating execution.

There’s a movement in the blogosphere led by young technology entrepreneurs that proclaim, “Just do it…don’t bother with a plan…it will just slow you down”.  This is the worst advice I’ve ever heard.  Just because some youngster struck it rich writing the code for a widget that caught the attention of Google doesn’t make them an expert in launching a new business.  Caveat emptor.

  • Don’t assume just because there’s a need there’s a market.  If there’s one thing we’re learning from Applied Behavioral Economics is people, and entire organizations for that matter, aren’t as rational as we once thought.  Approximately 70% of economic decision making is emotionally-driven.  There could be myriad reasons your market isn’t ready for your product or service, none of them relating to what appears to be a rational need.  Validate your assumptions.
  • Don’t develop your product or service in a vacuum.  Get your target prospects involved early and involve them often along the way.  Making meaningful calibrations early in your development process is exponentially cheaper than making the same changes during your sales launch.  Be customer-centric!
  • Don’t price your product or service solely on the competition and never price by formulating your cost plus a desired margin.  While competitive pressure may influence your pricing, it shouldn’t define your value proposition.  If you price too low, you may be sending the wrong message and once your prospects are anchored to your price/value proposition they’ll never forget it.  It is very difficult to raise your prices once expectations are set.  And remember, except perhaps for Walmart, very few businesses have discounted their way to success.  Quantify and validate your pricing decisions.
  • Don’t be overly optimistic about your revenue projections.  Until you engage the market, you don’t know what you’ve yet to experience.  Be brutal with yourself regarding your pro forma financials.  Make painfully conservative revenue projections, then cut them in half.  Now, cut them in half again.  Is what’s left still a viable business?
  • Don’t underestimate the sales lag driven by early adoption rates.  It takes time to establish your presence in the market.  If you’re launching a disruptive technology (an entirely new technology or methodology that challenges the existing dogma) anticipate it will take you twice as long to achieve traction as you initially thought.
  • Don’t discount the level of noise your target prospects have in their world.  People are bombarded by anywhere between 3,000 and 5,000 marketing messages per day.  Just getting an appointment with a decision maker is ten times more challenging today than it was just a few years ago.  Expect your prospects to be overworked and remarkably busy.
  • Don’t assume you’ll be able to get seed-funding.  There have been dramatic shifts in the angel investor, venture capital, and private equity landscape in just the past few years.  Plan to bootstrap your way to your launch threshold.  For the vast majority of startups, that’s where the funding action is today, in commercialization, not development.
  • Don’t bet the ranch on social networking.  While the marketing tools have changed, the fundamentals are the fundamentals.  Social networking may help you connect, but will it drive engagement?  You may be able to build a large following and generate a bit of a buzz, but if you’re not positioned to commercialize and convert this traffic and attention it can be a waste of time.  Social networking is a tool, not a strategy.
  • Don’t go it alone.  Find some seasoned help, whether it is through S.C.O.R.E., a coach (with applicable skills and expertise in startups), an experienced strategist, or a trusted advisor.  You need someone that can challenge your assumptions and, at the very least, be a sounding board.  A planning template or software program does not replace the wisdom that comes with experience.