There may be an infinite number of ways to get from A to B on the entrepreneurial landscape since the path is taken is often unique to the decision maker’s entrepreneurial traits, the business model in play, and the competitive atmosphere in effect at the time.
Whilst the avenues to entrepreneurial success don’t always have a lot in common regarding the guideposts to follow, the pitfalls encountered by entrepreneurs tend to be more universal as documented by venture capitalists and other stakeholders that are most affected by the success or failure of entrepreneurial enterprises.
Even when you know your clients, have a passion for your product or service, operate with integrity, empower your staff, stay focused, follow-through, and all of the other vague virtues proffered by sage pundits of the entrepreneurial landscape, success can be derailed. Every entrepreneur out there is following the sage advice, yet most startups fail. Why is that?
Failure to See the Pitfalls
The buck stops at the desk of the individual that has a final say. How things will or won’t be done is largely the province of the individual at the top, in conjunction with venture capitalists or other investors.
Even though a person may not be that individual calling the final shots from the top, deciding on initiatives and directly influencing the organization’s success or failure, such person and all others in a company can provide valuable vision in navigating the less obvious obstacles lurking in the waters of entrepreneurial commerce.
Mistakes Everyone Can Help Avoid:
1. Scaling too soon: This is one of the primary downfalls as ambitious and typically over-optimistic entrepreneurs plot growth strategies. All the demand envisioned will need adequate staff and logistical resources to deliver as promised, in theory. Having the overhead of over-scaling eating you up from behind before you have actual demand instead of theory erodes financial resources and investor confidence. The justification for ramping up too soon is to preempt the problem of demand exceeding capacity. If there is one problem every investor is dreaming about, it is having more demand than they can fulfill. Staff at every level in an organization are best equipped to identify ways in which their departments can deliver greater productivity with lean resources.
2. Hiring priorities: There is a tendency for entrepreneurs to fill staffing positions with friends and family members that they feel they can trust. If they have the proven skill sets and track record to warrant such a decision, so be it. But, often that is not the case. Competence is always given in filling staff positions. The reason competence can be overlooked by entrepreneurs is the close-knit nature of entrepreneurial enterprises. It is easy to fall into the trap of letting “likeability” outweigh the competence of a prospective team member. Here is where existing staff ought to be empowered to weigh-in, not only on prospective new-hires recruited through HR channels but also by recommending appropriate associates or colleagues from previous experience.
3. Price-driven marketing: Ask fledgling entrepreneurs what the two key elements are in running a new company and the answer you often hear is an emphasis on providing great functionality at the lowest possible price. There are some societies in undeveloped economies that actually ascribe to this philosophy but when doing business in first-world economies the prudent entrepreneur knows that value governs buying decisions. The problem with competing on a price-based priority is that customers are loyal to the price and not your brand and this gives up competitive advantage when you are constantly paying more acquiring customers than you are saving by retaining customers.
The advantage of looking at common entrepreneurial mistakes is the historical recurrence investors have observed that suggest a high probability of future entrepreneurs stumbling into the same pitfalls if not forewarned. Whereas, the so-called tried and true methodologies touted for success are often vague and unique to circumstances that are hardly universal in the creative and dynamic world of entrepreneurs.