Bad Habits Of New Entrepreneurs
New entrepreneurs enter our industry every year, bringing much needed enthusiasm and ideas.
This is great for us as a collective, and I love supporting them wherever possible.
Having made a lot of these mistakes myself, I’ve seen some trends that can hinder new entrepreneurs and get in the way of them building great ideas.
By understanding why these habits undermine your effectiveness, you’ll be well placed to stay afloat in that critical first year.
Celebrating failure (the wrong way)
In the startup world we talk about failing fast and celebrating the things that don’t work.
This is often misinterpreted by new entrepreneurs, which Peter Thiel is quick to correct:
“The value of failure is greatly overrated; it is a preposterous myth”
There’s difference between
“Yay, we failed!” and “We failed but we learned so much that will fuel our next attempt”
“Yay, we failed!” is often said with pain behind their eyes, trying desperately to spin some poor decisions as being “part of the plan”.
Remember, nobody chooses failure.
Failure sucks, and it can be used to strengthen your weak points.
I was recently talking with an Uber driver in New Orleans about his team (the Saints) and who they wanted face in the playoffs.
“I’d rather play Atlanta than Carolina”
“Oh, didn’t you beat Carolina twice this year?”
“Yeah, but they won’t lose three in a row. They’ll have learned how to beat us, so I’d rather play Atlanta”
No team ever celebrates a loss, but they do make the most of the loss.
That’s the subtle distinction.
Ignoring crickets from the market
New entrepreneurs love getting customer feedback.
Positive feedback fuels their soul, and negative feedback helps them fix the holes in their customer service.
Silence doesn’t register on their radar, which means they overlook an important signal.
We once sent out a survey to all our past customers/participants, offering incentives to respond.
Of the 700 people who received (and opened) our email, only 23 responded in any capacity, and 16 of those hadn’t actually attended any of our workshops.
Instead of just focusing on the 23 responses, we needed to address the signal sent by the other 677 customers.
We had done well enough to have them sign up to our mailing list (and have them open the email), but not well enough for them to have any interaction with us.
That sent a loud message: “You’re a 6 or 7 out of 10”
This drove us to change our programs, pricing and communications.
If you have 10,000 followers and none of them bite at your offers, what does that tell you?
Either you’re talking to the wrong people, or offering them the wrong things.
Pushing things onto their customers
Reaching your first 1,000 customers is tough, but it should get easier over time.
If you’re selling something that’s valuable, then making a good pitch should lead to a healthy number of sales.
If it doesn’t, your value proposition isn’t strong enough, or your prices are perceived as being too high.
Entrepreneurs who ignore this point tend to start going the hard sell, using guilt and manipulation to force products onto their customers.
This works in the short term, but leads to either buyer’s remorse or a bad reputation within your industry.
Clever entrepreneurs ask their customers good questions, then go away and design things that their customers will love.
This leads to their businesses being oversubscribed, rather than becoming a boiler room.
Speaking at conferences
This’ll annoy some of you.
Too many early stage entrepreneurs would rather “tell their story” on stage rather than sell to their customers.
Yes it’s gratifying, but it’s probably better to tell the story after you’ve made the business work, rather than bluffing about your successes to date.
When he was starting out, Ramit Sethi asked Guy Kawasaki how he could get more spots on panels.
Guy’s advice: Go do something meaningful, right now you haven’t done anything notable.
Harsh, but brilliant advice.
When you talk honestly about your startup, you gain fans but not customers.
Guess which one you need first?
Delaying their financial modelling
There’s an urgency around building the magical product/service that will launch the business to the moon.
That urgency is totally normal, and often a good thing.
Sadly, some entrepreneurs use that urgency as a reason to go “Blinkers On” and avoid putting together a financial model until they’ve built the business.
That’s ok, but essentially it’s a bet on their gut instinct.
If they are right about the numbers “working themselves out”, great.
If they’re wrong, then they build a large business that loses money on every sale.
Smart entrepreneurs have learnt that understanding the numbers early will identify traps, and re-design the business so that it’s constantly profitable.
Spending long hours on the wrong things
When there’s so much to be done, the temptation is to throw hours and hours at the visible gaps in the business.
The risk here is that the founding team burn themselves out on things good things, but not the things that drive growth.
Again, this is tricky because they’re still good things, but not the factors that fuel the business.
Surface elements like logos, furniture, social media posts are good things.
Meeting large customers, filling sales pipelines, monitoring expenses and gathering feedback are the things that keep your business alive.