Entrepreneurs bring a lot of self-confidence to the table. Most abandon careers, often lucrative careers, at which they excelled to become their own bosses. This is generally a boon to their young business.
However, their high confidence levels and competence at their previous careers can lead them to make a number of common, avoidable mistakes.
Here are a few to watch out for.
The 7 Most Common Mistakes New Entrepreneurial Leaders Make
1) Not Delegating
Many, if not most, entrepreneurial ventures start out as one-person operations. The entrepreneur does everything, from bookkeeping and marketing to product development. Once the business reaches a point where more staff can be brought in, a lot of entrepreneurs find it difficult to let go of managing every detail; they insist on doing or rechecking everything.
This approach, no matter how understandable, is a waste of employee time. Even worse, though, it’s wasted time the entrepreneur could better spend on developing new products, making new industry contacts, or closing new deals. One of the best pieces of advice on delegating comes from Richard Branson, founder of Virgin Media.
“The trick is to start promoting from within on day one. I’m not just referring to moving people to new positions, but giving all employees enough flexibility to take on new responsibilities within their current jobs.”
2) Avoiding Professional Financial Advice
Entrepreneurs frequently attempt to manage their finances themselves, and often with disastrous results. Unless the entrepreneur happens to be an accountant starting a company, startup owners shouldn’t try to manage their own finances. A good accountant can keep a startup on the right side of tax payments and help develop a coherent salary strategy.
3) Failing to Diversify
It’s easy for entrepreneurs to develop tunnel vision about their product or service offering. They spend vast amounts of time thinking about, refining and pitching it. That hyper-focus, while advantageous in the beginning, can work against a startup after it gets established. Frequently there are opportunities to diversify products and services into closely related areas. One such company that managed to avoid this pitfall is Vivint.
The company started as a home security company. Vivint reviews and customer insights pushed the company to expand into home automation, home energy management, and then into home solar power. Each move followed logically, or built on the experience, from the one before. Allow your company to evolve to what the customer needs, and you’ll ensure success in the years to come.
4) Trying to Please Everyone
Almost no product or service is right for every customer, yet startups often try to build products and services for everyone. In the long run, this approach leaves customers cold. A fully-fledged piece of enterprise resource planning software meant for large corporations is probably not the right software for a small business, and vice versa.
The entrepreneur that focuses on a specific target market and builds for that market stands a much better chance of making actual sales.
5) Rushing the Hiring Process
When it comes time to hire, entrepreneurs often take the first qualified person that applies. The reasons can seem very pragmatic. For example, the company needs someone for the X process to free up the rest of the team to focus on business development.
While the business might get lucky with an ideal hire, rushed hires often wind up a bad fit for the company.
Startup organizational structures tend toward the horizontal. Someone steeped in the vertical structures common in established corporations may find the transition difficult and prove more disruptive than helpful. Taking the time to find the right personality, even if that personality comes with less experience, usually pays off in less stress and more productivity.
6) Launching Too Late
Trying to perfect the product before launching gives competitors time to put out a similar, less sophisticated product and capture an unassailable portion of the market share. Eric Ries, author of “The Lean Startup,” advocates for building and releasing the most minimal possible version of the product, soliciting customer feedback and refining based on that feedback.
While this approach works best with software, startups can apply it to other products. The company can always improve an existing product, but only one company launches first. Reid Hoffman, the founder of LinkedIn, offers similar advice. As he told Kissmetrics, if you’re not embarrassed by the way your company looks when you first launch, then you are late to launch.
7) Ignoring Advice from Other Entrepreneurial Leaders
Everyone offers opinions, but some opinions matter more than others. Ignoring the advice of established entrepreneurs, or not seeking their advice at all, puts a new entrepreneur at a competitive disadvantage. Building up a support system of other entrepreneurs and business mentors creates a place to vent, bounce ideas, and learn vicariously.
Entrepreneurs, out of overconfidence or inexperience, make a number of common mistakes. Those mistakes range from annoying to disastrous. By avoiding these common mistakes, the entrepreneur positions a startup for a much better chance of success.
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Image Sources: thesalesblog.com