Five Common Mistakes Entrepreneurs Make When Starting a Company
Starting a business is one of the most exciting things you can do. Finally, the dream of being your own boss is coming true.
# Mistake 1. You are not your customers
Entrepreneurs often think that they know what the customers want and then spend a lot of money, time and energy creating a product or service that no one wants or will pay for. They key to a successful start-up is ensuring that your product or service fills a customer need and that it adds value to them. While having that drive and conviction that your business idea is great is important, it is equally important to go and talk to your potential customers. In essence, do your research and sometimes you will hear answers that you do not like. But that is a good thing because then you can pivot your idea and move forward.
# Mistake 2. We can’t go to market until the product is perfect
The biggest mistake first-time entrepreneurs make is that they will hold on to the product to get it perfect. It is a natural tendency to want to put the best product into the marketplace. Something that you can be proud off. Unfortunately, the longer you take to launch a product, the longer it will take for you to get customers and get money coming into the business. The likelihood is that the start-up will run out of money and not have enough financial support to promote to customers. The key is to build a minimum viable product and try to get a beta customer where you can build, test and iterate the product. The plan should be to fail early, quickly and often. More than likely, what you think is a perfect product and what you would build with a beta customer will be different
# Mistake 3. Keeping Your Idea Secret
There is a common misconception out there that there are people waiting to steal your idea and so I must keep it a secret. In reality, ideas are just ideas. It does not matter how brilliant your idea is, success depends upon executing the idea. Too often entrepreneurs are fearful of letting their idea go and apply the ethos that I can do everything myself. The more people you talk to, the more insight you will gain and the better your idea will start to crystallise.
# Mistake 4. I have no competitors
Unless you have a state monopoly, this will never be true. Every business has competitors, whether they are direct or indirect. Direct competitors offer similar products and services, while indirect competitors offer different products and services, but target the same group of customers with the goal of satisfying the same need (e.g Website developer and pre-formatted web templates are competitors). It is critical that you understand your competitor landscape and understand who is competition with you for your customers spend.
# Mistake 5. Having too small margins
Setting the right price is probably one of the most difficult things facing first-time entrepreneurs. Having a health profit margin will be critical to your business If you set the price too low, you may not be able to cover costs and it may be difficult to increase prices later. The opposite is also true, set it too high and it might be unattractive to customers. Setting the right price takes a bit of homework, but it is worth it. You need to understand your actual costs, how many products you must sell or how many customers you need to convert to actual sales and how does that break down weekly, monthly etc.