Part of being a good entrepreneur is learning from the mistakes others have made. So we consulted a group of entrepreneurs to find some mistakes they made when starting out, and common pitfalls that can be avoided.
Caught up in the exuberance of a new venture, it can be hard to see where you’re going off track. But that doesn’t mean you’re destined to repeat what others have done.
1) Insufficient testing of new ideas
For John Winning CEO of Appliances Online, the flipside of being a new, lean operation is a tendency for fast, risky decision making. Winning recommends lots of thought and testing before you take a plunge with your business.
“Don’t take risks without adequate testing,” says Winning.
In short, he says you should ask what the basis is for your decisions.
“The great thing about being a small business is the agility to take risks and change things on a regular basis. However, adequate testing of new ideas and changes should be conducted to avoid disruption or deviation from your mission and goals.”
2) Expecting customers to give you a break
Mark Coulter, acting CEO at Temple and Webster, warns about the tendency for new companies to get so wrapped up in being new, in being a startup, they forget the customer is only concerned with one thing — what you can do for them.
“Customers aren’t going to give you a break because you’re a small company. They don’t know, nor do they care,” says Coulter.
“What the consumer really cares about is the service they are getting, and the products they are receiving.”
“Ask yourself: why are you in business? What does your brand stand for? Why will customers want to shop with you?”
3) Trying to be all things to all people
“I think it’s a common mistake in business to try and be all things to all people,” says Jason Wyatt, co founder of Marketplacer.
Opportunities are great, but saying yes to too many will leave you without the resources to seize one properly. Conserve your ammunition, and only to commit to what really matters to your business and customers.
“It’s easy to be busy, but what are we busy doing?”
“Often it takes courage to say no to an opportunity, especially when it has the potential to bring in revenue (which is important to growing organisations), but it’s a long term focus for us.”
4) Thinking small
“Going global from day one” has become a mantra among Australian startups. It may not come naturally, but you need to look at your business through this lens from the start, says Kristin Harris, general manager of Deputy.
For most businesses expansion on this scale isn’t something you can just flick a switch to accomplish, but something you have to build towards. It’s vital to have all the building blocks in place from the start – from your market strategy to your technology platform – that will allow you to continue to scale globally if you are successful.
“A common trap many small businesses make is thinking too small,” says Harris.
“From day one, you should be thinking of the bigger picture and ensuring you put in place the processes and necessary steps to support your growth.”
“At Deputy, we were global from day one. While we may not have had an international footprint at that stage, we were building our business as if we were which made global expansion so much smoother. Everything you do in the early days affects the bigger outcome.”
5) Failing to plan
Speaking of taking on the world, you need to set down a mission like this with some actions. A plan. Failing to plan is planning to fail.
“Have a plan of attack – just because you’re a small company doesn’t mean you don’t need a business plan,” says Nick Molnar, managing director at Afterpay.
“A roadmap is essential so you know where your business is going and what you want it to achieve. Look at the big picture and steer your company in the right direction.”
6) Not investing early
A lean structure and an agile approach are often touted as essential characteristics of a new company. But you also need to invest in yourself, says Ben Pfisterer, Square Australia country manager.
Not only will this come back to help down the line, but the more you can reduce workload on inconsequential items, the more effort you can expend on what matters.
“If you’re going to succeed, look to optimise your operations from the outset,” says Pfisterer.
“Investing in the right tools and systems from the outset will streamline your processes, so spend time installing the best processes, procedures and tools will give you back more time to invest in refining your core product or service to be the best it can be. If you’re not doing it, you can be sure your competition will be—and they’ll soon have an unfair advantage!”
7) Not attracting talent early
It’s not just a shortage of talent that affects startups, it’s also the ability of founders and execs to let go and delegate, says Jason Titman, COO of Neto.
“Most founders are brilliant in their space but they have not built a business before.”
The answer, says Titman, is to really concentrate and invest in your team. Not only will this spread the work, but it offers different perspectives and ideas.
“Being able to ‘let go’ of some control and encourage others to join in on the vision is the mark of an outstanding founder. If the founders are great at selling their vision, they can often attract some great talent for less than this talent would be paid in a larger more well established company.”
8) Concentrating on limits
Starting lean often means going without big budgets for things like marketing. Rather than viewing this as a limitation, though, Titman encourages founders to get creative.
“Successful SMEs need to keep the big picture in mind but be as creative as possible about how they grow. Guerrilla marketing can often yield amazing results for a start-up or a small business.”
9) Waiting for customers
No matter how good your idea, you need to go find the people who want to use it. Build a good marketing strategy to get the word out, because that won’t happen by itself.
“‘If you build it, they will come’ – that’s only in the movies,” says Molnar.
“Customers will not just magically appear. PR and marketing is key to get your brand and product/service out there, build awareness and gain customers. When you get them, keep them by listening to them and providing exceptional customer service.”
10) Obsessing about competitors
It’s not your competition that is the most important, but your customers. Listen to your customers, says Molnar.
“Listen to your customers, not competitors – your customers pay for your product/service, they bring cash into your business. Competitors don’t.”
“Keep an eye on your competitors, just don’t obsess about what they’re doing. You know your market, trust your instincts.”
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