Tips & Tricks for Small Business Owners
The Five Biggest Mistakes You Can Make as a Startup
Sept. 6th 2012
Yes, another lousy countdown article telling you what to avoid to start up successfully. Come on, 98% of all start-ups fail (you know that statistic). Do you really believe that avoiding five things that you read about on the internet will get you rich? Wake up, buddy.
You have the perfect idea, the perfect team and the perfect business plan and you still fail. How can this happen? Maybe your idea was not so brilliant after all, or if you had such and such specialists, you would have gotten it right. No, the more likely the thing is that you are thinking in a wrong kind of way.
Face it, the chances of your succeeding with your start-up are few. Here is a list of things that will make your failure certain:
1. You cannot afford failure.
By affording to fail, I mean both mentally and financially.
Losing is really hard, mentally. Every loss damages our ego, and nobody likes losers. Our brains are wired by evolution to avoid losing and promote winning. That is why most of our decisions target emotional balance between losses and wins, rather than the best possible outcome.
Is it possible to have more wins than losses and still have a negative overall outcome?
Yes, if the stakes are different. Avoiding negative emotional imbalance leads to planning for small but relatively constant and easy wins. That is why people prefer to work for a salary, rather than being entrepreneurs.
Studies have found that one loss is equal to approximately 2.5 wins on our emotional scale. This explains why gamblers – who also are looking for emotional balance rather than financial outcome – eventually lose their money.
When you detach your emotional fear of losing (which actually can only be limited, as we are only human), losing financially is far more easy. It is all about numbers, and the only question that you have to answer is “How much money I can afford losing?”
2. You have the perfect business plan.
Common wisdom says that you have to have a perfect business plan and that you should stick to it. The thing is that our reality is way too complex, and planning for everything is not only impossible but is really damaging.
Why is that?
At this point you have only a business idea in your head, and you want to validate it. Having a detailed business plan will make you very comfortable with your idea – but also inflexible about it. Maybe your idea will only be good after you have majorly modified it, based on things you learn from your potential customers.
Substitute detailed business plans with visions and goals. Be flexible.
3. You want to deliver the perfect product (at once).
Common wisdom says that you have to have a perfect product to become a market leader. That is almost correct. Millions of entrepreneurs work for years and years to develop unique, perfect products, but when they go to market all these products fail. The catch is that the perfect product is not the one in your head, but the one your potential customers need.
Do not ask your potential customers what the perfect product would look like. They won’t innovate for you. A better tactic would be to develop a prototype and discuss it. Then develop a lousy, minimum-features product/service and develop it further and further, working together with your customers. If you are satisfying their needs and exceeding their expectations, your costumers will be happy to help you perfect your product/service.
4. You are not looking for proper feedback.
You should get the idea by now, that if you want to create what others want you’ll need constant feedback. Do not ask family and friends for feedback; you know that they love you and they are biased. Ask your customers and potential customers for feedback. Only they can provide you with quality information to draw your conclusions.
At these early stages of your business, try to balance your time between selling and listening.
The most important thing, after all, is to modify your actions and product in line with your clients’ needs.
5. The customer’s problem that you are solving is not significant.
Your customer has a pain alright, but giving money away is painful too. You have to give your customers real value for their money (as vague as this may sound). Every big problem is a big opportunity. No one will pay you to solve a non-problem.
Final thoughts (more positive this time):
The only way to succeed with your new business on this crowded planet is to embrace failure. Trial and error is freedom, my friend. It is embedded in all evolutionary processes. If you want to avoid big failures, just make hundreds of small mistakes (with little or no harm). Here is how to do this in practice:
1. Define your world-changing idea.
2. Break down your idea into smaller assumptions or actions.
3. Limit your losses.
4. Evaluate your loss and refocus. See what you have gained while losing.
5. Go out and fail again. Never give up.
Good luck. You will need it.
This article was written by Ivan Petkov, a guest blogger from http://www.gotweath.net/.
This article contains so many mind-blowing ideas, please consider rereading it. Please feel free to comment on any or all of those ideas, too.