Common Mistakes First Time Entrepreneurs Make

At a recent Bootstrappers Breakfast in San Francisco Bootstrappers Breakfast we discussed mistakes that  first time entrepreneurs often make and came up with this list:

  • Don’t try to replicate processes of your former big employer. The chances are highly likely they will not suit your start-up.
  • Don’t rush into a co-founder or employment relationship. Take time to find the right co-founder and hire the right people.
  • If you start out working with friends, relatives, etc, have everything spelled out clearly in writing. Plain English is fine, but make sure everyone agrees.
  • Looking for investment when you can bootstrap. First have paying customers who generate cash flow. Once VCs see that you have a business that you can scale, getting them to invest will be easier.
  • Don’t just tell your friends about your ideas, they may be too polite to tell you about problems. Find out if you can get a real customer to agree to pay for it.
  • Don’t try and buy the sale: make sure customers pay adequately for the services that they get.
  • Don’t hire a salesperson until you know how the product can be sold. You need to be the salesperson initially as you would get to know prospect’s and customer feedback.

I sent this list to the Bootstrappers Breakfast Yahoo Group and and several folks offered additional suggestins.

Contributed by Eduardo Briceno, CEO, Mindset Works:  I’d add the top 5 reasons why businesses fail according to Joel Peterson:

  • Make wrong hire-fire decisions,
  • Run out of cash,
  • Culture (violate values, norms),
  • Founder issues (founder can often not scale and lead the company), and
  • Not adjusting what they need in order to serve the marketplace

From Leonard (Lenny) Greenberg is Founder and CTO of Assistyx LLC:

  • Get your product out the door and into real (paying) users’ hands. Figure out the minimal set of features that will sell and get it done.
  • Profile your buyer like an FBI profiler would. The more you understand your buyer the better you can market or sell to them.
  • Don’t hire a sales person until you have a buyer profile, can clearly articulate the BENEFITS and attempted a few sales yourself.

Mary Beth Deans CEO of Palazzotech

Don’t get ahead of yourself…..don’t invest in expensive people, software or services you don’t need right away. As your business evolves, it will change. What you thought was critical at one time might be unnecessary 6 months later. And guaranteed you’ll have other things you need to use that money for….

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