You came up with an awesome business idea. That idea inspired you to write a business plan. So now you are ready to run your business in full operation. Whatever you venture into – whether it’s an e-commerce site or a flower shop, be cautious of the biggest errors business starters can commit.
From Steve Blank’s “9 Deadliest Start-up Sins”, let me enumerate the five biggest mistakes any business starter can make.
1. Assuming full knowledge about what the customer wants
Blank notes that the “First and deadliest of all is a founder’s unwavering belief that he or she understands who the customers will be, what they need, and how to sell it to them. Any dispassionate observer would recognize that on Day One, a start-up has no customers, and unless the founder is a true domain expert, he or she can only guess about the customer, problem, and business model. On Day One, a start-up is a faith-based initiative built on guesses.”
I believe that founders have an idea about what customers need and want. But such an idea should be well-founded and supported by facts. If those ideas have not been tested yet, then take some action to establish that those ideas are right.
2. Assuming full knowledge about creating the right features
This assumption holds another one of those mortal sins in starting a business. According to Blank:
“These founders specify, design, and build a fully featured product using classic product development methods without ever leaving their building. Yet without direct and continuous customer contact, it’s unknown whether the features will hold any appeal to customers.”
It comes to no surprise why any business is bound to fail once the owner makes no effort to connect with customers, to learn what they want and to apply such knowledge into product development.
3. Inflexibility of launch date
“The product launch and first customer ship dates are merely the dates when a product development team thinks the product’s first release is ‘finished.’ It doesn’t mean the company understands its customers or how to market or sell to them, yet in almost every start-up, ready or not, departmental clocks are set irrevocably to “first customer ship.” Even worse, a start-up’s investors are managing their financial expectations by this date as well” asserts Blank.
The problem when you get too focused on a launch date is that the potential to finish your product haphazardly is very high. Without ample time given for proper testing, product sales are sure to flop.
4. Insufficient testing
This mistake goes hand in hand with the previous one. It takes a while before you finally get the hang on the ins and outs of running a business. Although you might have noted that many businesses have remained upbeat after years of operation, their status is a product of those years of trial and error and learning. To reiterate Blank:
“Established companies execute business models where customers, problems, and necessary product features are all knowns; startups, on the other hand, need to operate in a “search” mode as they test and prove every one of their initial hypotheses.”
5. Too rigid a business plan
Of course a concrete step to set your goals straight is to write them in your business plan. It’s no rocket science why you should write a business plan. It serves as the blueprint of your dream enterprise, but you need to leave some room for necessary modification as you move along with your business operation.
“Traditional business plans and product development models have one great advantage: They provide boards and founder an unambiguous path with clearly defined milestones the board presumes will be achieved. Financial progress is tracked using metrics like income statements, balance sheet, and cash flow. The problem is, none of these metrics are very useful because they don’t track progress against your start-up’s only goal: to find a repeatable and scalable business model” discloses Blank.
There are other start-up mistakes that you should avoid. The list provided above is not exhaustive.
What other start-up mistakes should beginner entrepreneurs know? Please share in the comments below.