Starting a company is always a challenge because there really is no one "road map" to follow. There are countless variables that make your long-term strategy unique — which is a good thing, or you probably shouldn't have founded the company in the first place.
But while running your business is sure to have challenges specific to your situation, the challenges that come with running a business in general are often much more straightforward. There are still certain common elements you have to account for, just like there are certain common mistakes that you will almost definitely make. By learning as much about the latter as possible, however, you put yourself in the best position to avoid them — thus paving the way for future success and prosperity moving forward.
Mistake #1: Buying into the Myth of the "Sure-Fire Solution"
Again, your startup was founded on a singular idea — you identified a gap in the marketplace, along with a viable opportunity that would allow you to fill it.
But as "guaranteed" as your product or service may seem, it absolutely brings with it a certain degree of risk. Every business venture involves taking risks and failing to acknowledge this is one of the biggest mistakes that startup founders can possibly make.
Don't let your passion cloud your common sense, especially in those fragile early days. Market risk is real, and if you burn through a ton of cash developing the perfect product or technology instead of the perfect solution to a real market need, it could fatally harm your long-term efforts before you've even had a chance to get off the ground.
As you begin your startup, take some time to speak with real customers and get a genuine understanding of their needs. Let the information you find validate your idea, rather than being a solution in search of a problem. At that point, you'll be mitigating a lot of the risk of founding a startup — not pretending that it doesn't exist.
Mistake #2: Failing to Value Constructive Feedback
With any new organization, there are essentially two levels of mistakes that you'll be making: those relating to the specific company you've founded and those relating to your ability to function as an entrepreneur.
The first speaks to the product or service you're trying to get out to the masses and your ability to do that. The second involves how you operate when you're in command of a new small business in the first place.
People who have been in your position before — those who know exactly what they're talking about — are going to have constructive feedback regarding both of these key ideas. Taking constructive feedback as a personal attack instead of an opportunity to learn is one of the biggest obstacles you will need to overcome.
If feedback is truly constructive, it's always coming from a positive place because it's meant as an opportunity to help you grow and further your abilities. Maybe a venture capitalist has some ideas about a better pricing structure for your product. Maybe a potential customer thinks it would be a really valuable solution if it had X, Y, and Z features.
If you're not willing to listen to this feedback, you're cutting yourself off from the type of insight that may literally mean the difference between success and failure.
Mistake #3: The Dangers of Hiring the Wrong People
Finally, one of the most important things that an entrepreneur can understand is that it's no longer possible for them to do "everything alone." Yes, that sense of "I'll do it myself" is what led to the founding of your business in the first place — but having a vision and executing that vision are two completely different processes.
Because of that, when it comes time to hire new people and bring new sets of skills into the fold, you need to resist the urge to look exclusively for people who are little more than extensions of yourself. Don't surround yourself with "yes men" and "yes women" simply because they're telling you what you want to hear. Go out of your way to find people who are smarter than you in certain areas and who have skills you don't possess. They're the people who can complement your natural abilities and carry your company closer to the finish line.
Experts agree that this problem manifests itself in other ways, too. Often, a first-time entrepreneur will hire the head of marketing and sales far too quickly and the head of product development far too slowly. How can the former possibly have something to effectively market if the latter position hasn't been filled yet? What are you actually paying that person to do if the product doesn't exist in its final form?
This is where it can often be necessary to stop, take a deep breath, and assess your current status. At any given moment, there will be problems that you're surrounded by as your company moves closer to profitability. The people who you hire are the ones who are supposed to help you solve them.
This means that each hire should bring something tangible and valuable into your small business that didn't exist before. If they're not doing that, you might be hiring the wrong person for the wrong job — and that can be worse than not hiring anybody at all.
Bob Mason, CPA writes for CountingWorks, an accounting news and advice website. Reach his office at [email protected].
About Bob Mason, CPA
Santa Cruz based Bob Mason, CPA (Coast Financial Services) has been providing the people of Santa Cruz with years of expertise in the tax and accounting industry. He provides a broad range of accounting, bookkeeping and small business services to help your business succeed. Using their expertise in technology they have built an intuitive website with useful tools and calculators and a monthly blog which they post to on a frequent basis. Check back weekly for their next tax or accounting topic.
