10 Mistakes Entrepreneurs Should Avoid
Thursday, October 12, 2006
Continuing the lists of mistakes that should be avoided by any entrepreneur, Paul Lemberg of BusinessCoach put up a list of another 10 entrepreneurial mistakes:1. Big Customer Syndrome
If more than 50 percent of your revenues come from any one customer you may be headed for a meltdown. Always look for new business. And always seek to diversify your revenue sources.
2. Creating products in a vacuum.
Do not be a product searching for a market. Do the "market research" up front. Test the idea. Talk to potential customers, at least a dozen of them. Find out if anyone wants to buy it. Do this before anything else.
3. Equal partnerships
Suppose you and your new partner split the company 50/50. That seems fine and fair right now, but as your personal and professional interests diverge, it is a sure recipe for disaster. Either party's veto power can stall the growth and development of your company. 51/49 works much better than 50/50.
4. Low prices
Set your prices as high as your market will bear. Even if you can sell more units and generate greater dollar volume at the lower price (which is not always the case) you may not be better off. Make sure you do all the math before you decide on a low price strategy. Figure all your incremental costs. Figure in the extra stress as well.
5. Not enough capital
Be conservative in all your projections. Make sure you have at least as much capital as you need to make it through the sales cycle, or until the next planned round of funding. Or lower your burn rate so that you do.
6. Out of Focus
Concentrating your attention in a limited area leads to better-than-average results, almost always surpassing the profits generated from diversification. Al Reis, of Positioning fame, wrote a book that covers just this subject. It's called Focus.
7. First class and infrastructure crazy
The best entrepreneurs know how to stretch their cash and use it for key business-building processes like product development, sales and marketing. Spend all the money really necessary to achieve your objectives.
8. Perfection-itis
Focus on creating a market-beating product within the allotted time. Set a deadline and build a product development plan to match. Know when you have to stop development to make a delivery date. When your time's up, it's up. Release your product.
9. No clear return on investment
Do the analysis. Talk to your customers, create case studies. Come up with ways to quantify the benefits. If you can't justify the purchase, don't expect your customer will. If you can demonstrate the great return on investment your product provides, sales are a slam dunk.
10. Not admitting your mistakes.
OK, everybody makes mistakes. Just try to catch them quickly, before they kill your company. To avoid some mistakes in the future, it sometimes helps to ask good questions ahead of time. Click the link if you would like a copy of my fractal strategic planning questionnaire.
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posted at 8:37 AM
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6Comments:
Commented by 
Anonymous, 4:38 AM
Anonymous, 4:38 AM
Nowadays there are a lot of people who have their own business or plan to start it. So, your post will be helpful for them:)))
Great points. One thing to keep in mind with low pricing is that it could be a temporary strategy to spread your name. When you have a steady flow of customers, you can charge what the market will bear.
To be an entrepreneur, you must have a motivation and a desire to be different than the norms. Entrepreneurship is often difficult and tricky, resulting in many new ventures failing. But, there are certain websites which are of good guidance to become a successful entrepreneur.
Great tips! Entrepreneurship is full of challenges but not withstanding there is nothing as more rewarding like being the boss of oneself. These mistakes you have outlined here can be avoided if the entrepreneurs take time to acquired entrepreneurial skills by studying materials on entrepreneurship, just like this blog, get materials on case studies of other successful entrepreneurs and study them. By doing these, such an entrepreneur can develop his skills and then able to avoid these mistakes outlined in this post.
I also think it is very important to plan for the future and not live for today in business. For example, one must imagine having to hire people to grow and therefore, include that cost in your pricing strategy even if you are a while away from hiring.
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