Acknowledge What Went Wrong, Pivot And Keep Moving Forward With A New Plan
Small businesses fail – a lot. According to a Business Insider report, an estimated 50-70% of small businesses will fail within their first 18 months. I know firsthand that starting your own business can feel like you’re dodging one disaster after the next.
No matter how many companies you’ve worked at before, how many advanced degrees you hold or how much industry experience you’ve amassed, you will make mistakes. Some of these mistakes will be frustrating, but you’ll bounce back. There will always be a learning curve associated with anything you do. But what if you could avoid making the same mistakes that sink other startups?
Identifying what actions cause failure – and learning how to avoid them – is a bit more challenging. Picking the wrong co-founder, for example, is cited as a common problem entrepreneurs face. The relationship you have with your partner and the skills they bring to your startup can set the tone for success or failure.
All too often, entrepreneurs lack sufficient self-awareness regarding their own strengths and weaknesses and don’t choose a partner with complementary skills.
I’ve worked in my fair share of entrepreneurial environments over the years and have certainly made mistakes along the way. From my personal experience, these are three of the most common mistakes first-time entrepreneurs make.
They’re the three mistakes I have made myself, and ultimately learned the hard way how to avoid repeating them in the future.
Hiring Employees Based On Salary Requirements Rather Than Talent Or Experience
When funds are tight, foregoing top talent can help cut costs. But those short-term savings can haunt you down the road. Talented people know their value. Sure, some may be willing to take a small pay cut to join your team, but they’re not going to work for peanuts.
Using cost as the primary driver for hiring decisions is one of the biggest mistakes I made at my startup. Despite being advised against this approach, I went with my (incorrect) instincts to hire unproven and inexperienced employees.
I thought I was being smart by being scrappy. I believed I could train these employees to make up for their lack of experience. I got what I paid for poor execution, with output lacking in both quality and quantity. A better approach? Hire for fit.
Waiting To Launch the “Perfect” Product
Your product will never be perfect. The longer you wait to launch, the more you will start to obsess over details that ultimately won’t matter to the user. Build something quickly, get the early model out and start testing.
Otherwise, you risk sinking significant time, energy and financial resources in a product that is not aligned with consumer needs.
When I founded my startup, we acquired a product that we could have gone to market with on day one. But my background at Fortune 500 companies and product teams had conditioned me to a very exacting product standard.
Consequently, I resisted launching since the product wasn’t perfect. Instead, I decided to rebuild it from scratch. I wanted to incorporate new technology stacks and deliver a superior user experience.
After months of execution, we were way off from our development timeline and not even remotely close to launching the new version. In the end, we were forced to launch our initial product and saw significant traction within a matter of just weeks.
What if we had launched sooner?
The right thing to do would have been to launch with a minimal viable product, test it for market fit, identify problems and evolve the product accordingly.
Failing To Create And Listen To An Effective Support Group
Who has your back? A strong support network should. When I founded my startup, I became consumed by day-to-day management. I knew it was important to build a network of advisors, but I kept putting it off.
As a result, I made strategic mistakes that experienced advisors would have caught (and advised against) if only I had taken the time to actually build my advisory team in the first place.
Being a successful entrepreneur takes more than just accepting that you do not know everything. You need to proactively take steps to surround yourself with the people who can make up for these knowledge gaps and who will speak up to stop mistakes. Seek their advice and act on it.
Starting your own business is inherently a risky venture. You may not be able to control external factors, like a sudden fluctuation in global markets. But there are many factors that are within your control.
The biggest one?
How you react to mistakes. Even if you avoid making the mistakes I discussed above, it’s inevitable that other mistakes will happen along the way. Don’t let your business become a failure statistic. Acknowledge what went wrong, pivot where necessary and keep moving forward with a new plan.
BusinessCollective, launched in partnership with Citi, is a virtual mentorship program powered by North America’s most ambitious young thought leaders, entrepreneurs, executives and small business owners.