I have been involved in the Sioux Falls entrepreneurial ecosystem for about four years now. During that time, I’ve seen many people get interested in entrepreneurship, make plans to start a company and give up when their business isn’t an immediate hit or they realize how much work it really is to start a company. Many people are not successful until their second or third startup, because they really don’t know what it takes to launch a successful company. As a first-time entrepreneur, you are almost certainly going to make mistakes that hold you back from being successful. It’s just part of the process. Don’t feel bad, because almost every first-time founder makes the same mistakes.
Here are some things that almost every first-time founder gets wrong:
- They don’t work hard enough. Doing anything worthwhile requires hard work and determination over a long period of time. Everyone would love to have six pack abs, but 99% of people aren’t willing to put in the time at the gym for months on end to achieve those results. In the same vein, many people dream of being their own boss yet aren’t willing to put in the work to build a successful company. If you want to start a successful business, you should plan on working at least 50 hours per week on your business for the next five years. It really does take that long to start and grow a profitable business.
- They think they know better than their customers. First-time founders believe they know everything there is to know about their industry, despite having limited knowledge and experience themselves. They start building their products without soliciting any feedback from their target market or integrating the feedback they do receive into their product or service. They end up building something that nobody wants because they failed to talk to and work with their potential customers as they were building their product. If no one is handing you money for your product or service (even if it’s not complete yet), take that as feedback that you haven’t yet solved anybody’s problem.
- They get stuck in perpetual planning mode. Spending a lot of time crafting an elaborate business plan or multi-year financial projections is usually a waste of time and effort. Most business plans do not survive first contact with the customer and your financial projections are almost invariably wrong. It’s easy to fool yourself and think that by making a business plan, you are getting closer to starting a business. You are almost always better off using that time to talk to potential customers, building out your product or service and trying to sell. I know one person that has been planning to launch a local service business for the last two and a half years! This person has a great business plan on paper and detailed financials, but does not actually have a business.
- They spend too much time networking and consuming content. Reading best-selling business books, listening to startup podcasts, listening to business audiobooks and attending personal networking events and business education classes are great ways to feel like you’re getting something done. However, none of these things get you any closer to launching your business. To avoid this mistake, only consume content that is directly relevant to what you’re working on right now and only attend networking events that your potential customers are at.
- They try to build something for everyone. If you try to build a product or service that is for everyone regardless of age, gender, interests, geographic location and race, you are almost certainly going to build a product that appeals to no one. You are better off trying to serve a small segment of the population well, because you will be able to build a product that meets the needs of that group of people. Even Wal-Mart doesn’t try to appeal to every demographic. They know their customers are price-conscious lower-class and middle-class consumers and focus on what matters to that audience—price and value.
- They don’t keep good financials. Many first-time founders have no idea how things like bookkeeping, accounting, taxes, incorporation, and payroll work. They try to keep their financials in Microsoft Excel or Google Sheets and think their accountant will figure out what to do with everything at the end of the year. Trying to do your own financials, bookkeeping, and payroll is a mistake. You will invariably make errors that will cost you more money to fix than if you had hired a professional in the first place. I learned this the hard way and ended up having to refile three years of taxes after failing to hire myself as an employee in my own business. Hire a startup-friendly accountant from the get-go that can help you out with these things so that you can focus on actually running your business.
- They don’t put enough focus on sales. There are only two things that you really need to have a business—a customer and a product or service to sell to them. Until you have your first customer, you don’t have a business. You have an idea. Many first-time founders don’t talk to a single customer until their product or service is fully baked. This is too late. You need to start doing marketing and sales as soon as you begin working on your product so that you have customers that are ready to buy by the time your product or service is ready to go.
Do you have any common first-time founder mistakes that you would add to this list? Please list them in the comments below.