Five Mistakes to Avoid as a Start-up


1. DON’T BE A LONE RANGER

Lone Rangers are almost never funded – You must understand the importance of a team and of having them buy into the plans. Understand that there are many creative ways of building a team. Identify either by title or in detail who will be doing what job. Organizational charts help convey this information to the reader quickly. Focus on their experience relevant to the job you expect them to do in this organization and on how (of if) they have worked together before.

Each key member of the team should be competent to perform the duties they are assigned and be able to work together as a cohesive team. Team members who do not know their limitation (even if they are friends or family) must be replaced as soon as possible.

Competent service providers, trade associations, and strategic partnerships can enhance your firm’s credibility – i.e. if they believe in you, maybe others should as well.

2. DON’T SELL THE PRODUCT

As a sales document, you are selling a business opportunity – not the product or service that you have or hope to create.

Make sure that you include what you want, what you are willing to ‗give up‘ (pay) for what you want, as well as when and how the buyer can expect to realize a return on their investment (the exit strategy).

Make sure that the return on the investment is commensurate with the risk of the investment.

3. DON’T GIVE UP YOUR DAY JOB

STARTING ANY BUSINESS IS LONGER AND HARDER THAN IT LOOKS; Keep your day job (a primary source of income) until you are well along into the process (or have a significant other who can provide support for you and your dependents during this time).
It typically takes a business two to three years to reach cash-flow break even – the point where no new investment in the business is required.

4. DON’T LOSE FOCUS

Most people start a business because they see a need – in fact, they often see more needs than are reasonable to fill in a reasonably short period.

In order to succeed, your business needs to strike the delicate balance, avoiding being labeled as a too narrow by focusing on only ―one product‖/―one market‖ and the flip side – being blasted as lacking focus by attempting to meet all the needs of all the potential markets with full developed, mature products. You can do this by fully describing your initial product and a couple of target markets/customer groups and then commenting on both plans for expansion (geographic, customer group, etc.) and product development (additional features to existing products and/or wholly new developments).

5. AVOID THE THREE DEADLY SINS OF THE ENTREPRENEUR

Many good businesses either fail because their owners— individually or collectively— commit one of the following three deadly sins:

  1. Paranoia: The paranoid will not tell others about their idea because someone will steal it. It is often paired with a lack of research of the competitive environment, since no one else could ever have thought of his or her product or service.
  2. Greed: The greedy do not understand that the idea alone (or even a good plan) is not very valuable; they would rather have a big piece of a very small pie than a small portion of an enormous one
  3. Sloth: The slothful believe that their idea, product, or service is so good that all they have to do is to think about it and they will grow rich – no action to turn it into reality is required