What is the single biggest mistake entrepreneurs make when starting up

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Venture entrepreneurs are buffered against mistakes by the need to raise money from savvy investors, attract a savvy management team, and pull together a savvy board of directors. Small business entrepreneurs, especially first-timers, fall victim to the same deadly trap time after time after time.

Few mistakes (I haven’t done but know for sure).

  1. Scaling: You want to start a ‘Hot’ business, for example, an online retail store. You know that the market potential for the business is $10 billion. How difficult it is to get a mere 1% business share in one year? Very difficult. it is very difficult to get a single customer for a ‘new’ business, let alone 1% market share. I am being realistic and NOT overly optimistic.
  2. Not testing the waters: People with access to money and investors may want to jump straight into the market with big advertising and grandeur launching. Such launches have always failed in history and doomed in the future also. Business is NOT about products and selling but the knowledge of a particular domain and utilizing it to help people. I reiterate, business is NOT selling but HELPING.
  3. Not having the patience: Data shows that 90% of new ventures fail in the first five years and 90% of remaining fail in the second next five years!. The success rate of new business is then ONLY 1%!. Why? Because it requires patience to become successful in business. There is a lot of learning involved. You need to crawl before you can walk, let alone run!
  4. Not segmenting your product and services properly: Apple sells to niche and they know this. Their product and services are oriented and targeted towards a specific audience. They know their customers very well and hence their focus is razor-sharp. Know Your Customers. Know their exact needs and proceed accordingly. Samsung failed only because of this. They don’t know their exact audience!.

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5. Not having a backup plan: Business is like a cruise into the unknown. It may happen that a few years are very nice and also others are very stormy. Hence always create a backup plan for your business. Always save for the odd day so that you can survive the storm when most of your competitors cannot!. The worst mistakes new entrepreneurs do is to buy a new car, a new house, a new vacation, if their one year profit is very good!. Markets are always reacting to demands and supply. Keep patience and avoid that SUV for at least 5 five years for sure!

6. Changing the business model too frequently: We are sure to react to change but NOT very often. If you have a plan, a conviction, stay with it for a while. Don’t change it often and frequently. Remember Murphy’s law: Anything that can go wrong tends to go wrong. It will always take more time than you think it will and always be more difficult than you assume.

7. Not changing business model after repeated failures: Contrary to the previous point, we sometimes stubbornly stick to our ideas. We disagree to change our plans even after repeated failures. Business is ‘flexibility’. Not as flexible as a silk thread but also not as intransigent as a logger wood.

8. Being a ‘one-man show’: Entrepreneurs are often ridden with the view of doing everything by themselves. They believe that only they can do everything better. This approach of doing it all by themselves kills a lot of precious time of themselves and hence restricts the progress.

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