And the 7 solutions to abate their consequences and save your flailing business before it fails for good.
In case you’re new to entrepreneurship — or have yet to experience a major failure — you may be unaware when you’re on the verge of stepping on an entrepreneurial landmine from which you simply can’t recover. That said, most failed entrepreneurs didn’t doom themselves to their tragic demise with one irreparable, brand-slaughtering decision. Instead, it’s usually a series of smaller, well-meaning, seemingly logical choices that landed their business in the hot water in which it’s currently boiling.
If you’d rather create a lucrative, solid company with raving customers and longevity than allow your fledgling business to simmer in the pot of your own mistakes, be sure to avoid the 7 common (and fatal) errors below. If you’re one of the unlucky ones who’s already committed one of these atrocities, read on for the solutions to resurrect your entrepreneurial future.
Let’s be honest: Many entrepreneurs go into business for the wrong reason. I’m not just talking about money-chasers or 9-to-5 escapees; I’m talking about people like you and me who have a product, service, or new innovation at the forefront of our minds.
Why would a product, service, or innovation be the wrong reason to pursue entrepreneurship? Because at the end of the day, business isn’t all about the product, service, or innovation. It isn’t about the awesome thing you’ve created or your big-picture vision. It’s actually about acquiring, serving, and pleasing customers, and few people approach business with a genuine customer-centric viewpoint.
- If you’re angry at your customers’ feedback, that’s a problem.
- If you just see your customers as numbers, that’s a problem.
- If you care more about making cool things than asking customers what other cool things they want, that’s a problem.
While this is one of the most frustrating pills to swallow, most of us entrepreneurs spend too little time, effort, and genuine attention putting our customers at the forefront.
The solution? Pause and challenge yourself honestly with this question: Are you providing an enjoyable, impressive customer outcome and experience, from your first ad to their last product or service delivery? If the answer is no, you know exactly why your business isn’t achieving its full potential.
I’m all about being frugal and efficient, just as much of the startup world promotes the idea of ship now, iterate later. However, that fiscally-conservative and efficiency-focused perspective can tempt founders to take things too far. In essence, it’s a short jump from being frugal and efficient to cutting corners and taking quality-reducing short-cuts to fast-track your profitability and success.
You don’t have to be an unethical person to give into this temptation; sometimes it seems like the logical next move. Unfortunately, these are the short-cuts that will come back to bite you with bad reviews, refund requests, and payment disputes. Faster or cheaper isn’t better if it’s at the customer’s detriment. The solution? Keep your cost-cutting and time-hacking actions far from the customer experience; if they can tell you’re taking shortcuts, you’ve already messed up.
Make no mistake: You do not have to be an expert at every single aspect of your business to be a great entrepreneur. However, there is one area about which you cannot cluelessly pay your problems away and stick your head in the sand: marketing (specifically, lead generation and customer acquisition).
If you choose to delegate and outsource marketing to an external team or expert hire, that’s fine; but whatever you do, shadow them first. You aren’t shadowing them to babysit or chaperone their use of your marketing dollars; you’re shadowing them to learn.
If you hire a marketing team that’s actually successful and fail to soak up even a fraction of the strategies they employ, you are creating your own major vulnerability, tying your company’s success to their team’s mysterious expertise. That’s a recipe for disaster in which your marketing hires receive the upper hand, leaving you the clueless player on your own team.
In my first couple of startups, I made a huge mistake, despite having what seemed like an air-tight long-term plan.
I knew exactly where we aimed to be in six months, twelve months, and five years. I constructed the most detailed five-year projection models, with waterfalls of pipeline offerings incorporated into year’s two, three, and so on. On paper, I was a meticulous planner, intimately tethered to progressing my startups to greatness. In reality, I was missing the most important thing.
You see, I knew where we aimed to be in two years, but not in two weeks or two days. I knew the big-picture goals, but I’d glossed over the bite-sized, short-term, day-to-day ones required to get us there.
Entrepreneurship can lack structure, but the early stages really shouldn’t. If you don’t have a day-by-day and week-by-week plan of what you aim to learn, tackle, and accomplish, it’s highly unlikely you’ll achieve the year-by-year or decade-by-decade plan. Small steps are required for big leaps, and you can’t just be the big-picture “idea” person if you aren’t instrumental in the minute execution that propels the journey to that greater end.
Ever heard of runway? Not the New York Fashion Week kind; I mean the kind that determines exactly how much longer you get the privilege of tinkering around with your fun venture before it actually needs to yield some ROI.
In an ideal world, we’d all have unlimited runway; in reality, finances usually dictate this timeline, hence why some VC-funded companies take years to attain profitability. If you aren’t going the venture capital route, but rather opting to bootstrap your startup, your runway is your decision and responsibility. Shockingly, I’ve seen an explosion of entrepreneurs dwarfing their own runway with a very risky method I wouldn’t recommend.
It’s called “burn the ships” and entails cutting off your financial safety net (typically quitting your job without a replacement) in order to force your own success. However, cutting of your stable cash flow doesn’t guarantee success; instead, it breeds desperation.
While I’m a wholehearted believer that a person on the brink of death or starvation will find a way to house, feed, and/or fund themselves (whatever it takes), I don’t believe this survival mode cultivates the best environment for brilliant entrepreneurial decision-making. The actions that will bring in fast cash to pay your rent may not be in the best-interest of the world-changing business you could have built. In my opinion, entrepreneurs don’t necessarily work best under grave pressure; instead, I believe ambitious people think and act best with more grace and runway.
A few years after my first startup failure, but before my biggest successes, there was a lull of about 7 to 10 months I dedicated to “research”. Coming off the heels of a couple failures and aiming to level up my competencies before switching gears again for a new venture, I believed immersing myself in information was the cure. Well, that’s how I pitched it to myself.
In reality, I would spend hours each day binging content from other entrepreneurs. Some was concrete, but most was inspirational, aspirational, or only tangentially related to the business I was aiming to build. Nonetheless, the content wasn’t the problem; the way I binged it was.
I wasn’t taking notes, taking action, and promptly implementing what I read, watched, researched, and learned into my work. In fact, I wasn’t really doing much work at all. If you’re going to pore over hours of information or advice on a daily basis, don’t allow that to become an excuse for procrastination. If you’re going to binge, binge on targeted, relevant, actionable information and take note on how you can swiftly apply it to your business. Then, do it — like now.
I probably delayed my entrepreneurial progress by more than a year because it felt safer, comfier, and easier to listen to someone else’s advice than to give it a go myself. Don’t be that person. Entrepreneurship is doing, not observing.
No matter what business you’re in, there’s one concept that you must understand to ensure you don’t sabotage yourself by reacting too fast. That concept: Acceptable conversion window.
Far too many entrepreneurs expect their new business will start making sales in days — a week at the latest. As the days turn to weeks and the sales fail to appear, they start to consider quitting altogether. Of course, there are other options:
- Alter your marketing
- Alter your targeting
- Alter your product or service
However, you can’t know which — if any — of those options to choose if you haven’t understood the fundamental basis of your product’s acceptable conversion window. This is a fancy way of saying the reasonable amount of time between when a prospect first encounters your marketing and when they finally make a purchase. So many impatient entrepreneurs make drastic changes or quit altogether when success — or the tweaks required to obtain it — is right around the corner.
Selling a $50 t-shirt shouldn’t take 3 months of marketing, but selling a $50,000 service might. If you don’t have a solid grasp on the average conversion window for products in your industry at your price range, as well as an acceptable customer acquisition cost threshold, you’re simply flying blind. Dragging out inefficient, costly marketing for excess months without progress is bad, but giving up too early may be worse.