We are living in the Period of Entrepreneurs. We surpassed the dot.com era of the late 1990s long ago. Entrepreneurs are born every day and the rate of entrepreneurship is now 0.28%, which creates around 476,000 new businesses in the United States alone. This is according to the Kauffman Index of Entrepreneurial Activity of the USA. Just between 25 and 40 of these new and old businesses value over $1 billion. If you have ever attempted to search on how to embark on your own business, you’ll likely have come across the nugget of information that says about 90% of new businesses fail within the first 5 years. This can be pretty alarming, but knowing how to spot a business idea that is not going to work and look risky and may collapse is an important skill for anyone, particularly if you are working with new startups. Therefore, if you want to build a great business, you need to be very deliberate about whom you let into it. Every positive person you let into your life increases your chances of succeeding by 11%. This is according to a study published in 2010 in the Proceedings of the Royal Society. But you should know that just one sad friend can double an individual’s chance of becoming unhappy. Figuring out what to avoid and what decision to take for your business won’t always be easy, but with a little practice, you can visualize things that might bring your business down. This article shares a list of things to avoid when in or starting a new business:
1. Don’t invest in what customers say they want
It is true we always think customers are the ultimate judge of idea but we should remember that customers don’t always act like they say they will. Their opinion provides rich insights, but we should not take them at face value. We can be customer-centered, but can start building only when we have strong evidence that customers will put their money where their mouth are.
2. Searching for the perfect idea
Don’t search for the perfect idea. People believe a great idea will certainly lead to a successful business. In reality, the first concept has less impact on a venture’s success than you might think. What matters is how you can take an idea and mould the idea into a value offer that customers want.
3. Falling in love with your first idea
Don’t fall in love with your first business idea. It is rarely the best. Formulate different value proposition and business model alternatives before narrowing it down on superior options. What you need to do is to keep your ideas rough and at high level as they will most likely evolve throughout the testing phase.
4. Don’t get distracted by shiny objects
You should not focus on, or spending too much time on things that are not core to your value proposition. You need to make sure you get the core right before you can deal with secondary or tertiary items.
5. Don’t try doing too much at once
People have failed by trying to be all things to all people. Narrow your scope or how many customer segments you serve at first. Get the right start and prove your product, then expand and scale.
6. Poor execution
Poor execution can kill your business if you don’t quickly react to it. You hired the good team, have good products but you still fail because you poorly executed your plan. You need to know the critical issues that are blocking you from executing your plans, and then fix them first in other to save your business.
7. Don’t mistake your hallucination for a vision
When ten entrepreneurs/intrapreneurs think they have a great vision, one of them is onto something promising while the nine others are only hallucinating. When embarking on a business we always think customers will be falling over themselves for the product or service when they most likely won’t. You should not waste time refining your vision into a business plan but instead, examine with customers and partners if your vision has legs.
Timing is an important factor when in/starting a business. Your business model and value proposition can be so great, but they won’t succeed if the environment is not ready to welcome it. You can get on a market either early or too late and doesn’t get enough traction or when there are too many established competitors with powerful business models. Therefore, you need to know the appropriate time to embark on business.
9. Don’t let competitors obsess you, but customers
There is nothing wrong copying from the competitors, this might even give your company a temporary advantage. Instead of being obsessed by the competitor, create value propositions that brilliantly address your customers’ needs within a superior business model. You should focus your efforts on understanding what customers crave for and build it for them.
10. Have clear business model story
Don’t build multiple value propositions, creating several revenue streams, and being on many different fronts that you can’t figure out what exactly it is that you do. This way you will lack a clear business model story. A clear business model story is one where the building blocks of your business model build together to execute one well thought out strategy that will create, deliver and capture value.