Over half of all new businesses will not exist after the first 5 years. It’s a sobering thought, but the silver lining is that the mistakes of those who’ve gone before you provide valuable lessons. Learn from the mistakes of others and follow our advice below to avoid becoming another statistic.
Accept advice
A common characteristic of all entrepreneurs is self-confidence. If you don’t believe in yourself and your dream, you can’t expect others to come along for the ride. But be careful not to blur the lines between self-confidence and bullheadedness.
Many new businesses have an advisory board or even formal board structure that provides entrepreneurs with access to senior professionals. Unfortunately, many entrepreneurs fail to leverage this wealth of wisdom and business acumen. Don’t go to a board meeting, jot down ideas and recommendations and never give it another thought.
Think of your external investors and advisors as much more than just deep pockets, Take advantage of their maturity, credibility and experience. No one doubts you know your business best but be open to advice and you’re more likely to succeed.
Don’t over-invest
You’re attached to your idea, so it’s tempting to invest in all the bells and whistles. Don’t exhaust all your funding on making your product sexy when it’s really not required. Take a step back and objectively assess whether you’re ignoring the core revenue-generating aspects of your business. Investors will want to see a commitment to profit and over-investment will raise red flags.
You need to have an extremely clear handle on your cash flow as many successful businesses have come unstuck when an unexpected market event occurs and they don’t have access to a reserve fund. This year started with bushfires, floods and the coronavirus, which wouldn’t have been in any business plans or cash flow forecasts last year.
Step outside the bubble
It’s foolish to assume that, “If we build it, they will come”. Of course, you need to be optimistic about your product, but an external focus is essential to success. Get out and pound the pavement - that means getting out in the field, engaging with customers, seeking alliances, monitoring the competition and following industry trends. Do you have a clear view on your market and the short- and mid-term trends?
Scale your marketing as you grow
It’s important to create a clear roadmap for your marketing activities so you don't overspend in the early days. But don’t neglect your marketing either. It’s critical to get the foundations right to help you scale - focus your efforts on your brand, content and creating a high-performing website so your customers can find you online.
Research your audience and what resonates with them to get your key messaging right. Many new businesses tell people what they want to say rather than what their customers want to hear. Focus on what you do differently to find your competitive advantage and then test, test, test!
Don’t try to do it all
It’s easy to get distracted and take on more than you can handle. Don’t delay your business plan, make this a priority. A detailed business plan is your road map for success. Commit to a strategy and don’t stray from the path. Entrepreneurial minds are always on the loose but successful business people are able to remain focused and stay on task.
A key feature of any business planning process is to work out your top strategic actions and prioritise execution.
Don’t get over attached to equity and control
In a risk-adverse environment, it’s challenging to find stakeholders. Equity and stock options should be considered your primary currency. Remember you are asking people to commit valuable time and effort for intangible payments, which may never convert to profits.
It’s your baby and it can be hard to relinquish control, but parting with equity will enable you to find co-founders, employees and form useful alliances. Being part-owner of a successful business is preferable to having full ownership of a business that’s bust.
Manage your emotions
It’s impossible to divest yourself of an emotional attachment to your business. Passion, energy and enthusiasm is what makes you an entrepreneur. It’s a 24-hour obsession, a combination of highs and lows and at times you will be plagued by self-doubt, disappointment, frustration and anger.
The best way to manage your emotions is to find a co-founder who complements your temperament. If you’re hasty and impatient, find a partner who’s steady and strategic. A conservative entrepreneur can benefit from a partner who takes risks.
Opposites attract, search for someone who complements, rather than mirrors you.
A well-balanced team will achieve success
At BlueRock, we understand how the entrepreneurial mind works and we can anticipate the pitfalls. Our experienced team will offer you an innovative, multidisciplinary approach. We’re as excited about your dream as you are - we can help you make it a reality.
