In entrepreneurship the distance between inception and success is a road filled with landmines.
According to Dr Peter Wainaina, a financial investment consultant, here are some common mistakes to avoid.
1. Founder arrogance
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While it is true that a lack of confidence in your business, your product and in yourself is a recipe for disaster, the opposite extreme (ie arrogance) is just as dangerous. Attitudes like “If we build it, they will come” or “We have no competition” and “We have the most features!” can result in sloppy decision making. Know what you’re getting into and have a clear plan to monetise.
“Research is paramount. Don’t just rely on what you think you know, educate yourself on your product and on your market. Whichever area you want to break into, put in effort and dedication in understanding it. Then take action that is backed by authentic research,” says Wainaina.
2. Assumption consumption
Assuming there is a need for your product rather than proving there is a need is akin to asking for failure. Friends and family will more likely than not give unreliable feedback and you cannot trust their hype.
A different, more viable approach would be to make a small financial commitment to prove that customers will actually buy your product and not just say they will.
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Startups should focus on clarifying what value their product creates by asking themselves these basic questions, which should then be tested, initially by a survey of the target market audience:
What is the problem? Whose problem is it? How big is the problem? What value are we creating? Who would benefit from this? Who would pay for this value and how much?
3. Thinking you’ll easily acquire millions of customers
Start-ups tend to be overconfident in assuming the market is waiting for them and will accept them with open hands. Thus, they fail because they don’t correctly segment their target market.
“Underestimating your money will cause you to run out of money before long. Some people approach business too aggressively and inject all their resources expecting immediate results in months. Give yourself some leeway when it comes to expenses,” adds Wainaina.
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As an entrepreneur, correctly balance the marketing 5Ps (Product, Price, Promotion, Place and People). Start-ups shouldn’t target the millions that might never use their product/service but rather the smaller handful who will enable them to better their proposition. While in this building stage, expect little or no cashflow.
4. Talking to all and sundry about your business idea
Silicon Valley business man Guy Kawasaki said: “Ideas are easy. Implementation is hard.” And advice is everywhere. Getting too many opinions and suggestions only leads to loss of idea and indirectly loss of your own Intellectual Property.
“Even if one has to discuss, then they should limit it to few people and also execute a Non-Disclosure Agreement, before sharing any information. At the end of the day, the best business adviser is your own self,” says Wainaina.
5. You lack focus
Wainaina warns that trying to do too many things at once when they have something that is starting to work is bound to fail.
“There are tons of opportunities out there. Many founders inevitably get the itch to add more to the scope of the business and kill that singular focus on what your business does well. If you stay focused, you stay in business.”
6. You don’t have an online identity
No business in this decade will work without social media. Doesn’t matter if it is a cake shop on the corner, an e-commerce operation, or a service like consultancy that you intend to take national, much of your marketing will be conducted online.
Prospects will discover you, interact and give feedback to you through your online presence, so you need to decide early on what that presence looks and sounds like.