10 things some entrepreneurs don’t understand

images

  1. The business. I have seen founders who aren’t technical start technology companies, founders who figure that financial issues can be delegated such as accounting, taxes, etc., founders who don’t know modern leadership or corporate culture concepts. Such founders figure someone else can understand, make the right decisions and implement properly. Delegation can work but don’t delegate understanding, delegating could mean opportunities missed or less than optimal solutions implemented. The founding team needs to understand each aspect of the business.
  2. Every assumption in a plan is a risk. Every assumption is a non-fact, to say there are no risks means there are no assumptions and thus everything is a fact even future oriented information such as potential market share. Founders need to view their start-up as turning assumptions into facts.
  3. Some founders believe it’s OK to lie or exaggerate to customers, investors, partners and employees as long as the founders deliver on their promises. Exaggerating and lying, set a corporate culture where issues are allowed to fester until they become problems and individuals become self centered in their orientation and place their own enrichment above the positive impacts for the customer, investors, etc. It also increases risk for customers when potential issues and clarity on how risks are alleviated are not explained.
  4. All businesses are about people, saving them time, saving money, accomplishing their goals, etc. it’s why employees work there and customers buy. Understanding motivation, perspectives, expectations and how customers will evaluate the company and its offering are necessary.
  5. Customer’s risk. The customer is taking a risk buying from a new company. Marketing has to be two pronged: how does the start up’s solution solve the problem and will the solution deliver on its potential, the start-up needs to eliminate the risk of a bad purchase for the customer.
  6. The market. The market is in constant evolutionary change. Start-ups need to be able speak about how their solution fits where the market is going over the coming years, particularly in conjunction with other solution possibilities. I have seen too many start-ups that are variations of a theme which current solution providers will someday incorporate into their solution.
  7. A founder might have a vision and a broad and detailed understanding of how to accomplish it, but many struggle to communicate that to others in our attention deficit world. We need to be able to communicate a spaceship sized idea to a compact car sized attention span.
  8. Fixed costs vs variable costs. A business model has to have the proper balance between fixed and variable costs. If the business has a potential for large volumes of customers or will evolve quickly as the business model is better understood then an initial fixed cost and variable cost structure needs to be appropriately planned. In general, if the model will evolve it might be better to have a more variable cost structure thus allowing the financial structure to evolve with the business.
  9. Emotional commitment. A start-up is a significant trial of emotional strength. The start-up will likely have more negatively stressful events than positive accomplishments. This can wear down one’s commitment and passion. Founder’s need an unswerving reason why they are doing this start-up, it can’t just be about getting rich.
  10. Constant validation. Your idea and approach will need to evolve, what worked yesterday might not work today. A founder needs valid and reliable validation sources that constantly reality check ideas.
Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s