Launching a new product is a difficult process, and there are a lot of pitfalls along the way.
As an entrepreneur, I made mistakes that very likely led to the demise of my startup. And as a startup facilitator and supporter, I continue to see entrepreneurs needlessly fall into traps that could be avoided. While these may not be the five most critical mistakes an entrepreneur can make, they are certainly pervasive and damaging.
1. Incorporating too early.
This one may be a bit trivial, but it’s a lesson I learned the hard way. You may not need to register a corporate entity and build a company to create a great product and conduct some initial feasibility testing. Incorporating is pretty inexpensive, but drafting partnership and operating agreements, managing finances and other legal housekeeping that come along with an active corporation can add up quickly.
At some point, you’ll need to incorporate. An infusion of external funding, generation of revenue and bringing on new team members requires the structure. But wait until that event occurs before you register your company, because things can move quickly and expectations can increase dramatically once you launch a corporation. If possible, first build a prototype and put it in front of end-users. Or even better, sell the prototype to a customer to truly validate your product.
2. Product doesn’t solve a problem.
I recently led a focus group to examine the potential impact of a new health care information technology product. The first thing I asked of the participants was to list the biggest problems they face in their daily workflow. After a brief moment, one participant said her biggest problem was the exact issue the product was going to solve. I had given the group no indication of what the proposed product was or what problem it was trying to solve. They hit the nail right on the head with the very first response, all on their own. That’s how I knew the product inventors were on to something with real value.
Unfortunately, new products that solve a significant problem are the exception, not the rule. This is one of the more systemic problems among startups. No matter how polished and cool the product, the chances of success trend toward zero if it doesn’t solve an actual problem. I’m not talking minor inconveniences here, either. The product has to solve a real-life, I-will-pay-hard-earned-cash-to-fix-this kind of problem. If you’ve already launched a product without a clearly defined problem, there’s not much you can do about it. Your best bet is to do some soul-searching, go back to the drawing board, and – if you’re really lucky – execute a painful and oftentimes expensive pivot to reach a point where your product is addressing a clearly defined and solvable issue that real people face.
3. Lack of focus.
I call this the shiny new pebble syndrome. Entrepreneurs who suffer from “SNPS” are very effective at idea generation and starting down the startup path, but they’re prone to moving on to new projects when they get bogged down in the tedium of execution. They are always excited to tell you about the new product they’re developing, but when asked about the last product they said had so much potential, they’re prone to dodge the question or downplay it.
Entrepreneurship isn’t about idea generation. It’s about taking those ideas, identifying maximum opportunity and a path to success, and effective execution.
Because I’m prone to SNPS, I’m very much aware of how difficult it can be to buckle down and finish what you’ve started when there are so many shiny new pebbles in the stream. But it’s the awareness of my own proclivity toward starting new projects that has helped me the most. By being conscious of my current projects and goals, I’ve been able to set the shiny new pebbles aside, put them on a list for future consideration, and stay the course with whatever project I’m focused on at the time. After all, if I want my endeavor to survive, focus is key.
4. Unhealthy focus on the business plan.
Business plans are great. They help put your jumble of thoughts and ideas down on paper. Not only does it allow you to fully flesh out your plan and timeline, but also it gives you an opportunity to clearly think about and visualize your goals, metrics and benchmarks. A comprehensive and well thought-out business plan can be a huge help in keeping you focused and on track when things get tough and complicated in the commercialization process. This makes it a key asset to the success of your product and, therefore, your business. But sometimes something happens along the way – it’s almost as if the business plan becomes the product.
I’ve seen step-by-step guides to becoming an entrepreneur or launching a product look something like this: Step 1. Write a business plan. Step 2. Register your corporation in Delaware. Step 3. Fund your company. Step 4: Success!
Notice how the business plan appears to be the primary output in the steps above. What about creating a truly awesome product? What about getting customers or end-users to rally behind that awesome product? If you have customers eagerly awaiting the launch of your product, is your business plan really all that critical? Maybe not.
5. Feelings of entitlement.
Entrepreneurs are a unique species. There’s a certain confidence that comes along with the entrepreneurial mindset. That confidence is imperative for the survival of a startup. But all too easily, confidence can become bravado – or even worse, feelings of entitlement.
Entitlement is a deadly sin for a startup. The key components of funding, awards, contracts and customers are earned. They’re earned by hard work, great ideas, solid execution and effective communication. But for an entitled entrepreneur, all of these things are deserved. When entitled entrepreneurs don’t get funded after a pitch or don’t see the sales expected, it’s never because of a flawed product, poor market fit, ineffective business model or lack of execution. It’s because they (investors, customers, etc.) didn’t get it. So if you find yourself uttering the phrase, “They just don’t get it,” know that it’s time to take a good hard look at yourself, your team, your plan and your product, and try to figure out where you went wrong.
Cody Stringer, who holds a doctorate in biological engineering from University of Missouri, is an entrepreneurial specialist with Mercy Research & Development in Springfield. He can be reached at firstname.lastname@example.org.
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