Lesson 11: Avoiding Common Mistakes
What You’ll Learn: Failure is a natural pathway to success and is inevitable as you strike out on your own as an entrepreneur and small business owner. Bold ideas are, after all, risky. This module walks you through the life lessons of someone who has been in your shoes and shows you how to avoid some of the setbacks and struggles along the way.
Avoiding Common Mistakes (continued)
My Top 10 Grains for Sand
Let’s call these gems my Top 10 Grains of Sand, those seemingly tiny things that can cause so much trouble.
Grain of Sand #1
Just because you think it’s a good idea doesn’t mean others will. There are many examples of “great ideas” that weren’t that great. That goes for some of my own ventures. I also did a quick search online and found a couple of other examples: Odor-emitting Computer – an entrepreneur raised $20 million to create a USB stick that emits a scent (think perfume or a pizza) when you receive promotional email. Cool tech, but really? Another example is the Chocolate Sausage on a Stick. Yes, it really was a product for a very short time.
Clearly, the people behind these ideas were dedicated to them. But there was no market. Just because YOU think it is the best idea ever doesn’t mean others will. Test your idea on friends, of course, but more important, test it on “experts” – conduct focus groups. Hear from the audience that you are trying to sell it to. Come away with an honest answer to the critical question, “Is this really a good idea?” Sure, it solves a problem you’ve identified in your own life, but your market has to span well beyond just a few people.
Grain of Sand #2
You determined it’s a great idea; you are going for it. You clearly know what you’re doing and you’ve tested the waters. It will work. That’s what my husband did. There was no doubt that he understood the customers he was going to serve and there was no doubt that his offerings (software and services) would solve significant problems for these customers. Lesson learned: Just because you have a great idea, doesn’t make it a business.
There are many building blocks and hurdles you need to get through to transform an idea into a product and then a business. If you are catering your products or services to a very niche audience, then your ability to grow the business will be limited by the target market who can use your product. If you’ve created a great product, but it takes a degree in quantum physics for someone to use it or understand, then you have a minimal audience who can deploy your product. If you have a service that solves a problem for many but does it in a specific way that only can help a few, then you are limiting your market. Failure to think broadly about your business model in a way that can reach the greatest audience without being too generic can cause your product or service, even if it’s a great idea, to fail as there is not enough demand.
Digital Print Version
Grain of Sand #3
Times change, technologies change, and people’s priorities change, too. How are you going to keep up with the change? Here’s just one example: Blockbuster. You may not know even what that is these days. They closed in September 2010, but “back in the day,” that’s where all the movies came from. Then Netflix came along, mailing DVDs to you; now they stream them. I wouldn’t be surprised if everyone changed their business model to an on-demand, streamed model. Blockbuster either never saw this coming or they pivoted too late. If your business idea is based on dying technologies or habits and patterns that are changing, how can you ensure that your offerings keep up and change with the times and technology? Given what’s going on with the Covid-19 pandemic, the world is changing dramatically; more and more business will be done remotely and online. Keeping up with changing times and ensuring that your offerings remain relevant will be a challenge for the foreseeable future.
Grain of Sand #4
Knowing how to run your business is just as important as being able to get your product or service out the door. There are many examples here that are important to list out, but for the sake of time, I’ll just name just a few. If you’re taking investment, make sure you allocate the funds to the agreed purpose. Money earmarked by an investor to cover product development should not be spent to pay yourself or your partner’s back pay. Yes, you have to eat, you need to have a place to live and keep the lights on. But, if you’re pocketing the money that was meant to get the actual product off the ground, then there’s something wrong with the way you’re running the business. You may be struggling financially and it may be tempting to take this money out to cover your bases instead of developing products, but doing that is not a good sign. You have a business strategy and budget outlined for a reason. Stick with your plan or proactively update it to move finances around to cover critical or unexpected needs. Do this as part of a strategy, not as a kneejerk reaction to an unforeseen problem. On this one, I’m speaking from an investor’s perspective.