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Entrepreneurship 101: What Not to Do When Starting Your Business

Within GoferBroke, we understand the excitement and passion that comes with starting your own business. It's a thrilling journey filled with highs and lows, but it's important to remember that not all advice is good advice. In this article, we want to share some common mistakes that entrepreneurs make when starting a business, so you can avoid them and increase your chances of success.

 

 

 

Bad advice: Raise money to start your business

One of the most common misconceptions about starting a business is that you need a large amount of money to get started. While it's true that some businesses require significant capital investment, many successful start-ups have started with minimal funding. Instead of focusing on raising money, it's more important to focus on building a solid foundation for your business.

Think back to your reasoning for starting the business; where did the idea come from? What gap did you see that needs fulfilling?  Start by identifying your target market and understanding their needs. This will help you develop a product or service that resonates with your customers. Once you have a clear understanding of your target market, you can start testing your ideas and gathering feedback. This will not only help you refine your product or service but also attract potential investors who see the potential in your business.  I opened a business on a minimal bank loan which made it important to account for every penny.  I struggled, but made it work.  Conversely, a friend borrowed an amount of money from a number of friends and took his family on an expensive holiday in the first year, which didn’t go down too well with the friends whom he had borrowed money from. 

 

Bad advice: Split the business 50/50 with a co-founder

Finding the right co-founder can be a game-changer for your business. However, splitting the business 50/50 with a co-founder may not always be the best idea. While it's important to have someone who shares your vision and complements your skills, it's equally important to have clear roles and responsibilities.

A while ago, I went into a business partnership to open a restaurant in a tourist town in Ireland and we made the mistake of not being clear about our responsibilities.  We did complement each other, with different skills, but we also had very different personalities and concepts of running a business.  It got quite messy when it became obvious that we weren’t working for the best of the business.

Before entering into a partnership, take the time to discuss your expectations and goals for the business. Consider each other's strengths and weaknesses and how they align with the needs of the business. It's also essential to have a written agreement in place that outlines the ownership structure, decision-making process, and how conflicts will be resolved, and, ultimately, what happens if the relationship breaks down.

 

Bad advice: Create a formal business plan

A formal business plan is often seen as a prerequisite for starting a business.  In the past, it has been de rigueur for approaching a bank for a loan.

However, spending too much time creating a lengthy and detailed business plan can be counterproductive.  It can lead to too much focus on something inflexible that then gets put in a filing cabinet and forgotten about.

Instead of focusing on writing a business plan, focus on creating a lean business model that outlines your key assumptions and how you plan to test them.

Back when I was starting my restaurant, I put together a business plan.  It was to show to the bank that we had considered how the business would develop, but it never saw the light of day after that.

A lean business model allows you to quickly iterate and adapt your business based on customer feedback and market conditions. It's a dynamic tool that helps you stay agile and responsive to changes in the market. By focusing on the core elements of your business model, such as your value proposition, target market, and revenue streams, you can develop a clear strategy that guides your decision-making process, and adjust and adapt it as you business journey develops.

 

Bad advice: Focus on your product first

While having a great product or service is important, it's not the only factor that determines the success of your business. Many entrepreneurs make the mistake of focusing too much on product development and neglecting other critical aspects of their business, such as marketing, sales, and customer service.

It is a great feeling to see an opportunity, to come up with a new idea, but focusing on the idea rather than the client that might want it could mean you miss your opportunity.  There are plenty of badly designed product failures out there, but consider some of the successes when the target market was changed.

• Bubble Wrap was initially invented as a textured wallpaper. It didn't find success in that market, but its use as protective packaging material for shipping delicate items turned it into a ubiquitous product in the packaging industry.  (We’ll ignore the environmental issues around this one though….)
• Post-it Notes were developed by 3M as a failed attempt to create a super-strong adhesive. When the weak adhesive was repurposed into sticky notes, the product found success as a convenient tool for leaving temporary messages and reminders.

And we can’t ignore this one…

• Viagra was initially developed as a medication to treat hypertension and angina. During clinical trials, researchers discovered it was being used for another reason by the human male guinea pigs.  The drug was subsequently repurposed and became a blockbuster treatment for a completely different reason.

Instead of solely focusing on your product, take a holistic approach to your business. Invest time and resources in understanding your target market and developing a strong brand identity. Create a marketing strategy that effectively communicates the value of your product or service to your customers. Additionally, prioritize building strong customer relationships and providing exceptional customer service. By considering these factors alongside product development, you increase your chances of building a successful and sustainable business.

 

 

Bad advice: Hire a C-level or executive assistant as your first hire

 

When starting a business, it's tempting to hire a C-level executive or an executive assistant to help manage your workload. However, this can be a costly mistake, especially in the early stages of your business. Instead of hiring top-level executives, look at hiring employees who can contribute to the core functions of your business.

Focus on hiring individuals who have a strong work ethic, relevant skills, and a passion for your industry. Look for team players who are willing to roll up their sleeves and get their hands dirty. By building a strong foundation with a dedicated team, you can leverage their expertise and gradually expand your team as your business grows.

However, don’t ignore your weaknesses and blind spots.  It takes great courage to start a business, don’t blow it by thinking you now know it all and don’t need help. 

At Khensu we recognise there is plenty of free – and good – advice out there for start-ups and we’ll point you towards that support where appropriate.  Where we can offer specific advice for your circumstances that is beyond the basic available level, we’ll have a conversation.  You’ll also have access to our sophisticated AI tool that can predict the success chances of your business.

 

Conclusion and final thoughts

Starting a business is an exhilarating journey filled with opportunities and challenges. While it's natural to seek advice and guidance along the way, it's important to be mindful of the advice you receive. Not all advice is created equal, and it's essential to critically evaluate each piece of advice based on your unique circumstances.

By avoiding common mistakes such as focusing too much on raising money, splitting the business 50/50 with a co-founder, creating a formal business plan, solely focusing on the product, and hiring top-level executives too early on, you can increase your chances of success.

Remember, entrepreneurship is a continuous learning process, and you make mistakes along the way. Embrace the journey, seek mentorship and support, and never stop learning.