There is an old saying that goes:
- Success is the result of Good Judgment
- Good Judgment is the result of Experience
- Experience is the result of Bad Judgment
Have I learned anything after almost 20 years of doing startup companies? I try not to make the same mistakes more than at least 1 time. Today I sat down and decided to make a list of the most common mistakes that I (and other entrepreneurs) typically make.
1. Overestimating the market potential
I have been so sure about my products, and known that they would change people’s lives that I just couldn’t imagine not capturing at least 75% of the market… OK, or at least 10% of the Chinese market.
2. Overestimating the necessity of my products or services
Not only will I capture that 75% of the market, but there is no way anyone can live without my products and services. They’d be fools not to line up at my door…right?
3. Falling in Love with my own Technology
I have this great, unique and patented technology that surely almost everyone will want. The problem is that I haven’t yet figured out who will be willing to pay for it… Pushing a technology that is in search of a problem to solve is like pushing on a rope.
4. Creating Products not Markets
Technologies come and technologies go. Think of all the big, fancy new technologies that have appeared like a flash fire in a frying pan, then just disappeared. The technologies vaporize, but the markets usually last much longer. My new technology may solve a problem in a market. If I make an investment in getting to know this market well and in providing more solutions to other problems that this market has, then I will end up with a loyal market and a sustainable business, no matter what technologies come and go.
5. Creating revenue projections to make the numbers work
As entrepreneurs we usually believe so fully in our idea or business concept, that we often end up “tweaking” the numbers just a bit to validate our beliefs. It’s usually not intentional and seems harmless at the time to say “yeah, maybe we’ll get 3% of the market instead of 2%…yep, see now look how wildly successful this will be!”. Or saying things like, “Nah, I really don’t think expenses will run at 30% of revenue…it’s probably more like 25%”. Do your homework, make your projections as accurately as you can, then live with what the bottom line number tells you.
6. Trying to do it all myself
It is so easy to fall into the trap of trying to do it all. One of the key strengths of good entrepreneurs is that they are usually capable of doing lots of different things – and all relatively well. I am pretty good at lots of small business tasks (sales, marketing, social media, technology, finance, communication, negotiation, etc.), so I am often tempted to try to do it all myself. The problem is that I don’t have the time and pros usually do a better job (there is a reason they are professionals and I am not). Outsourcing tasks and building a team are key factors to accelerating business development… but not easy for most entrepreneurs like me.
7. Underestimating timelines
From idea conception to product launch in three months, no problem! My rampant enthusiasm often leads me to believe that I can do things quicker than is humanly possible. It is good to set timelines that push the limits, but keep in mind what is realistic.
8. Believing that short term goals will lead to long term success
If I keep achieving my short-term goals, then I should be on the right track for the long term, right? Not always. If I took the time to determine my long-term (3-5 years) goals and then mapped them to my short-term outcomes, then I am probably going in the right direction. Short-term goals without a long-term strategy is like driving in the dark with no map or GPS. If I can only see as far as my headlights reach, then I may end up going in circles forever.
9. Underestimating the competition
It’s often easy for me to think that I will be able to enter and dominate a market due to my superior business model and my flamboyant skills. It’s also pretty easy to underestimate the competition. The fact that they are already in the market gives them a big advantage. Respecting this fact causes me to get clever and to devise strategies to outthink and outperform the competition.
10. Forgetting to work ON my business instead of just working FOR it
Building a business is not the same as running one. These two things are not the same. I sometimes forget that my job as an entrepreneur is not to do all the work myself, but to be the strategist who puts in place systems that function and tasks that others can do. Building scalable and sustainable business is the goal. The majority of my work needs to be on how to grow then business, not on the actual doing.
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