The life of an entrepreneur is full of mistakes. And so it should be. Because, without mistakes, nothing new will ever happen and no company will become successful or lift off in the first place. So, while you should be allowed to make mistakes, you should avoid getting tunnel vision. Let’s also learn from others and see how they avoid some of the biggest mistakes?
There is already a lot of research on the mistakes that entrepreneurs make. While it is interesting to learn about these mistakes, it is more useful to learn what to do instead. Therefore, instead of studying mistakes per se, the most valuable insights can be derived from studying successful experts—serial entrepreneurs—and see what they do differently than the average, first-time entrepreneur. This reveals three big mistakes that entrepreneurs should avoid.
Mistake 1: Searching for a Gap in the Market
The first mistake that many entrepreneurs make is that they look for a “gap” in the market—an unaddressed need that no one else has seen, or for which the entrepreneur could imagine a solution that no one else has. Accordingly, they spend a lot of time on market research and finetune their product or service endlessly to find the “perfect” solution. And if that doesn’t work out, they move to the next gap in the market.
Why is this a mistake? For several reasons. First, there are hundreds of gaps in hundreds of markets and it may take forever to make up your mind so that the risk of “paralysis by analysis” is substantial. More importantly, more often than not, the need that is “found” tends to be the entrepreneur’s personal need. But, this doesn’t automatically mean that there is a market out there with others having the same need. Finally, and most importantly, it is not at all evident that the entrepreneur is equipped best (or at all) to fulfil the need that is found. There may be thousands of companies that are better equipped and that will jump into the gap soon.
What to do instead? To avoid this mistake, expert entrepreneurs work the other way around. They start by looking inside, at themselves and their company. They take their unique means and competences as starting point and make these the basis for their products and services. And then they interact with others to get them commit to their company—as customer, as supplier, as employee, or as any other type of stakeholder.
Mistake 2: Too Much Emphasis on Goals
A second mistake that many entrepreneurs tend to make is an overemphasis on goals. They focus on the future, on creating a grand vision, and on setting objectives. Accordingly, they create a plan, write it down and try to stick to it. And then they measure their progress.
Of course there’s nothing wrong about setting goals and creating plans. But the mistake is that this is often overdone. Goals are not strategy and often reflect hope and wishful thinking instead of a clear plan of action. A company exists not because of its goals, but because of its products and services. And too much focus on goals draws the attention away from the company’s current most pressing strategic problems.
What experienced entrepreneurs therefore do instead is focusing on the present instead of on the future. This may sound odd. Isn’t entrepreneurship all about creating a future vision and plan to get there? It isn’t. Expert entrepreneurs tend to focus on the here and now, on what they can influence today. Instead of formulating goals, they rather diagnose their current strategic situation and focus on resolving the most pressing problems (and on leveraging their strengths, see Mistake 1).
Mistake 3: Ignoring Relevant Competition
The third big mistake is ignoring relevant competition. This mistake takes two forms. In the first, entrepreneurs have their mind fully set on the customer, often because they have been told that that’s the only thing that truly matters: customers matter, competition does not. In the second, they believe they are so unique that they don’t have any “real” competition, or even no competition at all—because their idea, technology, product or service is so new and different that no one does what they do.
Whatever the reason, ignoring relevant competition is dangerous. Because there is always competition. Always. Customers can spend their attention, time and money only once and if it’s not on you, it’s on someone or something else. This means that any alternative that the customer might consider is your competitor—including solving their problem themselves.
To avoid this third mistake, experienced entrepreneurs have learned to put themselves in the shoes of their customers and look at the world from their perspective. Instead of only focusing on the customer’s problems and needs, they also look at the alternatives that the customer has or may consider. And then they compare themselves to those alternatives and assess their relative strengths and weaknesses.
Note: next to this article, there’s also a freely available video on these three big mistakes. It contains some more details, especially on how to avoid them and it can be accessed here.