11 Pitfalls for Aspiring Entrepreneurs

These eleven traps can catch entrepreneurs and early stage businesses before they even realize it and will lead to failure if not anticipated and avoided or correctly when discovered. 1.    Getting Wedded To an Idea and Sticking With It Too Long.Don’t marry a single idea. Remember, ideas are the currency of entrepreneurs. Play with many ideas, research the opportunity and the competition, and determine up front which ones are most likely to bring money and success.  Many factors impact the success of an idea….timing, money, who you know….Your sense of urgency must be grounded with fundamentals of can the idea succeed based on solid planning and analytics. 

2.    No Business Plan.A business plan evolves.  Initially it will help you assess the feasibility of your business to achieve your personal goals and its success in the market.  Then I will provide a blue print for moving from a start up to an emerging company to a growth company to candidate for acquisition or for expansion. 3.    Build it and they will come syndrome.Your first task is to bring a product to market that meets a specific need of a customer.  You must know why they will buy and what they will pay for it.  Otherwise, your business plan and your forecast will never be a reality.  Then you must keep in mind that changes in your customers’ preferences and your competitors’ products and services can leave you in the dust unless you get to know your customers well, what they want now and will likely want in the future, what their buying patterns are, and how you can be a resource for them even if you don’t have the right products or services for them now! 

4.    Ignoring Your Cash Position.The world (your customers) doesn’t respond to even a superior product in the timeframe that you think they should. Unless you are dealing with a point of purchase, emotional purchase, statistics say a buyer needs 2 exposures before having a mental recognition to remember and want to move toward a purchase.  You’ll need plenty of cash to sustain yourself in the meantime.  Cash Flow means Cash flows in and out.  You will need to pay for the expertise you don’t have.  You need to have cash on hand to pay for your operating expenses and to hire professionals for short term specific engagements. 5.    No Mastermind Group.Get an advisory board or a mentor!  Sounds crazy for a small operation?  It’s not! The board can be family members that you trust, or friends. Ask them to be your board of advisors and review your business plans and results with them.  Having someone to bounce ideas off and get an objective opinion is critical.  They can also keep you accountable to your dream and your plan. 

6.    Ignoring Advise of those in the position to give it. Your Board of Advisors should consist of people with direct experience in the industry or in the go to market model for your business.  You should listen to them.  You should also listen to anybody who offers advice and can back it up with money or access to money.  Too many great ideas and great business die on the vine because the entrepreneur didn’t check their ego at the door. 

7.    Confusing Likelihood with Reality.The successful entrepreneur lives in a world of likelihood but spends money in the world of reality.  The Entrepreneurial spirit is one that is filled with hope, optimism, and drive.  However, the world runs on dollars and cents, supply and demand….if there isn’t demand and dollars that follow that, then there is no business. 8.    Scratch and Win Mentality.I have seen it see it so often….A company spends precious dollars on presentation fees and large retainers without doing their own due diligence on the firm to see if that expense will lead to success, and they think because they paid it, that money will automatically flow to them.  They could have a fundamental flaw in their business plan and to market, but will never know that the $15k or $20K they spent on fees should have been spent with professional services to bridge their gaps. 

9.    No Sales and Marketing Plan.A red flag to an investor is the formula…1% of a 300 Million dollar market means the business will generate $3Million.  A sales plan is a fundamental element of your income forecast.  Without a sales plan, there is no way for an investor to gauge your ability to implement.  For your ongoing business, there’s no serious way to gauge the financial growth and progress.  You need a realistic map for where the sales will come from, how they’ll come and from whom.  You need to know your cost of goods so you can determine your profit and break even.  The Sales Plan is different from the Marketing plan.  One create awareness and demand, the other maps how the strategy you need to get in front of the right types of people , companies, etc. There marketing plan implemented effectively, efficiently, elegantly and consistently will shorten your Path to Profitability.  10.     Being a Lone Ranger.You might be the key to everything BUT you cannot DO everything and grow at the same time.  Even modest success can overwhelm you unless you hire the right staff and delegate responsibility.  You need to have the cash necessary to hire permanent and temporary resources so that you can prepare your business owner, and someone owned by the business, if your business is going to be an asset to be acquired some day, it must be able to run with you.   That requires a good team and good leadership to develop the leaders around you.  You need to plan from the beginning on how you will grow your business to operate without you. 11.     Giving Up-Burn the Boats.Do Not give up…you must give it your all until you know that it is time to move on and recognize the errors in planning that occurred so you can lean and apply to your next endeavor.  Burn the Boats….When the Americas were first discovered by Cortez, he ordered his captains to burn the boats so that the men would not have a way out in their campaign to conquer the new world…except to win.  However failure is inevitable in some cases and is part of the learning process.  Some of the most successful entrepreneurs failed several times before doing extremely well.  So, if you’re failing-fail.  And fail fast.  And learn. And try again, with this new wisdom. 


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