Entrepreneurs are experience-based learning types. That means they learn best when they do something very good (create a superb marketing campaign and get their first customers) and when they make mistakes.
The problem with this is that making mistakes is extremely costly. So how can you avoid this? For starters, by recognizing the 9 common mistakes startups make in their first year as an entrepreneur. Stop yourself when you’re heading towards one of the expensive pitfalls described here.
Many people start creating a business from scratch based on their passion. This is key to survival and key to having fun. But how is your passion creating customers or partnerships? How is it building your team? An easy way to stop working in isolation is to find three networking groups you enjoy and that have the potential to give you referrals.
No beta testing
Whether you are in technology or not, get over your perfectionism! Create a simple version of the product or service you would like to deliver and put it on the market for testing. Give away free samples and ask for feedback. Improve and put it out again. Early adopters are often critical and honest. They are also returning customers because they know the real value you are offering.
Going after every opportunity
Early entrepreneurs often chase many different opportunities to save themselves from going under. The conundrum is that by stretching yourself in different directions, you can get a burn out and have clients not return. It is hard to excel when you are overworked and not doing what you are good at. Instead, always be strategic at every opportunity and say no if it doesn’t fit in.
Not seeking advice from experienced people
Theoretically, no one wants to make the same mistakes already made. But without the practice of being your own business owner, it can be hard to recognize an error. Test assumptions by talking to experienced people and create your own kitchen cabinet of mentors.
Focusing on finding new customers
When you are focused on continuously scoring new customers and building your portfolio, experience and network – you may forget one of the most important factors of running a business. Keeping customers! Ensuring the same person or company is returning for more gives you the opportunity to get better testimonials, build and test new services, and gain referrals.
Avoid spending time on setting up the ground works
Focused on sales and marketing only? Then how do you make your systems smart and effective? Especially new businesses have to know if seasons affect their sales and whether their time is mostly spent on administration. Perhaps you can outsource or hire a part-time (virtual) assistant to get work done faster and better.
Pricing too high or too low
One of the trickiest things is deciding what your pricing is going to be! This intersects with avoidance #2, no beta testing. “Play with your prices”, says Chris Gillebeau, author of The $100 Startup. By gauging buying patterns based on price, you quickly start to understand what people are willing to pay for your service or product.
Devaluating market research
I often have to give mentees an earful about not researching their market before they started and then testing their knowledge when offering their services in the first year. Without market research you are going in blind – you don’t understand the lay of the land! What are your competitors doing? How are potential customers making decisions? These are crucial questions that inform you of your own market position.
Being too informal
Often, we start selling to people we already know, such as friends, former colleagues and family members. It can be hard to ask them to sign a contract in order to receive your service. Yet if you don’t it is hard to enforce agreed upon points if needed. A small service can turn into a large service that takes up a lot of your time and resources without the payment for it. You may have sold a simple website, but the customer really wants all the bells and whistles for the same price. Without a contract, the perimeters are considered more fluid.
As Founder of Kaleidoscope and Business Mentor, Lisette Andreyko works with start-ups on gaining strategic focus. She is passionate about leadership development in start-ups.