Starting a business never ceases to be exciting. There’s always a new challenge, a new opportunity. Will you land that big meeting? Have to face some unforeseen crisis? It’s almost impossible to predict what any day will bring. However, there’s one thing on which you can always count: mistakes. At some point, you’re going to screw up.
The good news? Once you start getting out there, building your team, and meeting people, you’ll quickly realize that a lot of very common early mistakes are easy to avoid. So, in the hopes of saving you some time (and a headache or two), here’s a quick list. Steering clear of these early-stage “don’ts” will positively impact your initial strategy, your business plan, and even how you talk about your company. Basically, it’ll make your life a whole lot easier.
Don’t overestimate your market potential. Avoid uttering any sentence that begins with, “If we can just get X percent of the market…” This comes up surprisingly often. Chances are, you’re not getting 5 percent of the market. In fact, you’re probably not getting 1 percent of the market. An example: You’re young, hip, and tech-savvy. There’s a good chance that you’re a Mac person. Your friends are probably Mac people. Heck, most of the people you know might be Mac people. As of last month, Apple still has less than 4 percent of the global PC market.
Don’t be foolish about potential projections. Similar to the above, you need to be realistic about how much money-and how much good-your organization will generate. If yours is the sort of business where you’ll need to raise money, potential investors will want to see projections. Your numbers will be viewed skeptically. You’ll need to justify every one of your assumptions. So, keep your projections reasonable. However…
Don’t be humble, either. This was one of my early mistakes. I was well aware that I was going to be subjected to this sort of skepticism. As a result, my initial projections were extremely conservative. Bad idea. In my first few meetings, I got the same reaction: People loved the concept, but were surprised at how little money we were going to generate. Despite the fact that our idea had potential, I’d attempted to temper expectations. Turns out, I’d tried so hard to avoid looking unrealistic that I ended up looking unimpressive. There was a middle ground I was missing. Don’t go overboard, but don’t sell yourself short.
In fact, this is the reason many people advocate integrating a situational analysis into your projections. Take three scenarios-not great, good, awesome-and show how they affect your profits and the amount of good your company can do. Make it as easy as possible to understand. “If we get this many customers, here’s what happens.” It takes a bit more research and a bit more time, but it’ll show that you’re planning ahead for contingencies-something any potential investor will appreciate.
Don’t brush off your competition. Here’s another sentence that you’ll hear in pitches: “Our idea is so novel that we have no competition.” I’m going to be as clear as I possibly can on this: Yes, you do. Any organization-for profit or for good-has competition. You will always be battling with someone for customers, donors, sales, etc. You’ll need to know who they are and be able to make a strong case for how you’re going to best them.
In addition, the simple truth is that there’s a good chance someone has already come up with your idea. That’s not always bad thing. You might have heard people talk about the “first mover advantage.” Well, in many cases, it doesn’t exist. It’s not always about doing it first; it’s about doing it right. Early on, we found an organization that initially seemed to have a similar idea. I was crushed. However, the more research I did, the more I realized that their idea wasn’t as similar as we’d thought, and that they were, in my opinion, going about it completely wrong. In the end, it renewed my energy for the concept. I became focused on ensuring that we didn’t fall victim to the same errors in judgment I saw the other company making. The lesson? Keep an eye on your competition. Respect them, even if you think they’re doing a lousy job. Try to predict their behavior. Learn from and capitalize on their mistakes.
The Takeaway: Mistakes are inevitable, but avoiding some of the errors that often tie down early-stage ideas is easy. By putting in a bit of extra time for research, analysis, and calculations up front, you’ll be able to save yourself a world of time and trouble in the end.
