Ten Common Missteps Entrepreneurs Make On Their Way To Market

It is the things we don't know, regardless of our intention, that often hinder our success as entrepreneurs. Here are ten of the most common missteps I've witnessed over the past decade while working with startup businesses.

Written May 17, 2011, read 2548 times since then.

Having spent the past ten years working as a consultant and business coach for entrepreneurial endeavors and investor-driven startups I’ve witnessed a lot of mistakes really smart, highly motivated professionals make on their way to market. When you sit back and examine them, they seem fairly obvious, but in the heat of the launch even the most seasoned entrepreneur can lose his or her perspective. Here are some of the most common missteps I see, year after year:

1.) Don’t fly by the seat of your pants. You need a business plan. Eight of the top reasons businesses fail, as identified by the Small Business Administration, can be traced back to the lack of sound, strategic business planning. The ninth? Inadequate business planning. The value of planning is in the process itself. It charges your vision with the positive energy of your intention. When done well, it forces the entrepreneur to think through potential risks and develop contingencies. It also provides a critical management tool for measuring and calibrating execution.

There’s a movement in the blogosphere led by young technology entrepreneurs that proclaim, “Just do it…don’t bother with a plan…it will just slow you down”. This is the worst advice I’ve ever heard. Just because some youngster struck it rich writing the code for a widget that caught the attention of Google doesn’t make them an expert in launching a new business. Caveat emptor.

2.) Don’t assume just because there’s a need there’s a market. If there’s one thing we’re learning from Applied Behavioral Economics is people, and entire organizations for that matter, aren’t as rational as we once thought. Approximately 70% of economic decision making is emotionally-driven. There could be myriad reasons your market isn’t ready for your product or service, none of them relating to what appears to be a rational need. Validate your assumptions.

3.) Don’t develop your product or service in a vacuum. Get your target prospects involved early and involve them often along the way. Making meaningful calibrations early in your development process is exponentially cheaper than making the same changes during your sales launch. Be customer-centric!

4.) Don’t price your product or service solely on the competition and never price by formulating your cost plus a desired margin. While competitive pressure may influence your pricing, it shouldn’t define your value proposition. If you price too low, you may be sending the wrong message and once your prospects are anchored to your price/value proposition they’ll never forget it. It is very difficult to raise your prices once expectations are set. And remember, except perhaps for Walmart, very few businesses have discounted their way to success. Quantify and validate your pricing decisions.

5.) Don’t be overly optimistic about your revenue projections. Until you engage the market, you don’t know what you’ve yet to experience. Be brutal with yourself regarding your pro forma financials. Make painfully conservative revenue projections, then cut them in half. Now, cut them in half again. Is what’s left still a viable business?

6.) Don’t underestimate the sales lag driven by early adoption rates. It takes time to establish your presence in the market. If you’re launching a disruptive technology (an entirely new technology or methodology that challenges the existing dogma) anticipate it will take you twice as long to achieve traction as you initially thought.

7.) Don’t discount the level of noise your target prospects have in their world. People are bombarded by anywhere between 3,000 and 5,000 marketing messages per day. Just getting an appointment with a decision maker is ten times more challenging today than it was just a few years ago. Expect your prospects to be overworked and remarkably busy.

8.) Don’t assume you’ll be able to get seed-funding. There have been dramatic shifts in the angel investor, venture capital, and private equity landscape in just the past few years. Plan to bootstrap your way to your launch threshold. For the vast majority of startups, that’s where the funding action is today, in commercialization, not development.

9.) Don’t bet the ranch on social networking. While the marketing tools have changed, the fundamentals are the fundamentals. Social networking may help you connect, but will it drive engagement? You may be able to build a large following and generate a bit of a buzz, but if you’re not positioned to commercialize and convert this traffic and attention it can be a waste of time. Social networking is a tool, not a strategy.

10.) Don’t go it alone. Find some seasoned help, whether it is through S.C.O.R.E., a coach (with applicable skills and expertise in startups), an experienced strategist, or a trusted advisor. You need someone that can challenge your assumptions and, at the very least, be a sounding board. A planning template or software program does not replace the wisdom that comes with experience.

Learn more about the author, Terry Murray.

Posted by Linda Paffel, Seattle, Washington | May 18, 2011

Very helpful. I have just finished development and am planning a marketing campaign. Your article is excellent.
Posted by Laura Dodson, CPA, Seattle, Washington | May 18, 2011

3: I would add that you need to be sure your product isn't just designed for you and your friends. Make sure your target market is large enough to sustain your product.

Doggy sweaters sell great. Sweaters for gerbils, while adorable, just don't sell as well.

Tax Preparation and QuickBooks Training
Posted by Terry Murray, Venice, Florida | May 18, 2011

Thanks, Linda...I wrote a series of blogs that may provide some additional insights for your upcoming campaign at http://yourbizstartup.com/page/2/.

Best of Luck!
Posted by Terry Murray, Venice, Florida | May 18, 2011

Hi Laura,

Great point and excellent way of making it! The gerbil analogy is funny! Thanks for positing.

All The Best, Terry
Posted by Kimberly Gauthier, Marysville, Washington | May 18, 2011

I spent nearly two years bouncing around from one photography niche to another with no clear plan. I've finally settled on writing a photography blog and offering photography workshops to beginners - now I'm ready to write my business plan.

I have no idea how to write a business plan. I've tried the SCORE site with no success - of course; I checked it out when I was bouncing around. Maybe it's time to give the site another look now that I have a game plan.

Thanks for this article. I would like to add that once you discover your niche and develop a game plan, it’s important to create a budget. It's so easy to get caught up in the excitement of starting your own business that you end up spending a lot more than you need to in the beginning.

My budget keeps me from leaping at marketing opportunities, for example - I'm forced to review the numbers and really give the opportunity a deep look before making the investment.
Posted by Terry Murray, Venice, Florida | May 18, 2011

Hi Kimberly,

You may find some helpful information on my blog site, http://yourbizstartup.com. One of my core services is coaching new entrepreneurs in writing their strategic business plans. I've been doing this work for more than a decade. You may also want to take a look at my book, "The Transformational Entrepreneur - Engaging The Mind, Heart, & Spirit For Breakthrough Business Success" which walks entrepreneurs, step-by-step, through the planning process.

Feel free to get in touch with me as well (through the blog site). I'd be more than happy to have a conversation with you that may help in your process.

Best Of Luck! Terry
Posted by Laura Bedford, Bloomingdale, Illinois | May 19, 2011

Thank you for this wonderful article! For folks who live in Bellingham, WA (and probably lots of other places) there are small business administrations that can be powerfully helpful with business planning, often at no cost to the entrepreneur. Share your heart and vision!
Posted by Minda Hevly, Seattle, Washington | May 19, 2011

Terry, Such great advice. Although each point requires a lot of work the value really is in the process! I customize a cash flow forecasting tool for clients and am always surprised how much business owners learn about their own business during the development process.
Posted by William Hebert, Florissant, Missouri | May 19, 2011

As a former Floridian who's been misplaced into St. Louis, I know that there are many differences in our marketplaces and many similarities, too. Your article is one of - or 10 of - those similarities. That information is universal and golden. If all new businesses would heed your advice then there would be less business failures during their first year. Thanks for writing it.
Posted by Debby Norman, Seattle, Washington | May 19, 2011

One of your best points was the need for a guide or mentor. A couple of people mentioned SCORE. Does anyone know any other mentoring resources? I'm a copy editor.
Posted by Terry Murray, Venice, Florida | May 19, 2011

Thank you Laura, Minda, and William for your kind words! Greatly appreciated!

Debby...in my opinion, SCORE can be hit or miss, depending on who you connect with in their ranks. The other challenge with SCORE is it is populated by retirees. While their wisdom can be indispensable, a lot of things that are happening today in business have rapidly shifted well past the business-as-usual past.

If you're looking for a mentor, try to find one within your networking activities or look back into your past and talk to former bosses you've admired. People can be really generous with their time if you express respect and gratitude!
Posted by Nancy Meadows, Kirkland, Washington | May 21, 2011

Really valuable info, Terry. Though as a right brain individual, I don't always enjoy the business side of business. Having said that, no business can be successful without following your steps. Get help with what you don't know or don't want to do, even if you have to pay for it. Having a sound business will pay you back many times over what you initially invested to get started on the right foot.
Posted by Terry Murray, Venice, Florida | May 22, 2011

Thanks, Nancy! I appreciate you taking the time to comment and share your sound insights!
Posted by Chris Mastaler, Pinehurst, North Carolina | May 22, 2011

Dear Terry:

I found your informational blog to be right on the nose. I was kind of hoping that somewhere you might have said, 'Social Networking brings sales/doesn't bring sales. I am assuming that the best way to advertise your on line business is SEO. Am I correct in this assumption? Chris Mastaler,
(Pinehurst, NC)
Posted by Terry Murray, Venice, Florida | May 24, 2011

Hi Chris,

Thanks so much! Social Networking is just part of our tool box...and we're very disciplined in how much time we spend with it. We consciously chose to create organic SEO with our firm, Performance Transformation, LLC, by publishing valuable content.

I've found participating in LinkedIn discussion groups and commenting on relevant stories in the main stream media (online) can elevate our visibility. Our next step is guest blogging, but there's only so much time in the day!

You may want to look at our approach by reading my blog series, "Building Your Brand in the New Economy" at http://yourbizstartup.com/page/2/.

Thanks again!
Posted by Richard Ortiz, Huntsville, Alabama | May 26, 2011

Thank you so much for the Great advice! ;-) I really needed that reminder and I'll add it to my list of Launch Guidelines.
Posted by Terry Murray, Venice, Florida | May 26, 2011

Hi Richard, I'm glad this has been helpful for you! You may also want to check out a current blog series I'm writing at http://yourbizstartup.com entitled, "The Key Questions Your Sales and Marketing Plan Needs to Answer".

The questions are based upon part of the due diligence Angel Funds use to evaluate whether or not they will invest in a company. It also aligns with the criteria companies use when considering an M&A. Even if you're a sole entrepreneur, contemplating these questions will greatly accelerate your traction in the marketplace.

Thanks again! Terry