Top 10 mistakes to avoid as an entrepreneur
I was part of an startup in 2012 and sold our Design Collabotion software to a global Contract Manufactuing firm. I had arranged a meeting to inorudce our CEO to the CTO of this company where our software was viewed as a strategic tool to grow their New Product Introduction (NPI) business.
The client CTO surprised us at the meeting that he wanted to invest $3 Million dollars in our startup! To my shock our CEO rejected the offer on the spot! He did not even leave any room to explore other options to extend our relationship beyond a simple software procurement. I knew right then that I am onboard a Titanic and our company was doomed.
With that I wanted to share the Top 10 Mistakes to avoid as an Entrepenure:
“Not every hello, leads to a date”
2. Scale Too Soon
One of the biggest mistakes entrepreneurs make is to mistime their growth where they end up with bloated staff without enough income to justify growth.
It would be well-advised to run your startup as lean and only hire the staff once the growth patterns from your bookings and orders have become repeatable.
1. Powerpoints vs Customers
Startup CEOs rely too much on Powerpoint at the expense of prototypes or customers! Savvy investors will not rely on the content of your Powerpoint slides to make investment decisions. In fact, securing customers is a much more reliable way to attract investors than powerful slides.
3. Obsession with Partnerships
Any partnership which does not accelerate your startup’s customer acquisition should be delayed or avoided. In fact, partnerships among early-stage companies can distract your startup’s team from focusing on customer acquisition.
4. Reliance on Patent protection
Some entrepreneurs get a false sense of security once they have filed a patent. Receiving a Patent does not mean your IP is protected. The odds of a small company winning a protracted and long legal battle with a giant company that has infringed on your patent is near zero!
So, don’t mention your patent more than once when you are presenting to savvy investors.
7. Total Market Size
Some entrepreneurs are easily romanced by the Total Size of the Market and assume that getting a 1% of such a large market is a no-brainer. Ironically, aiming to capture a very small percentage of the market could be a red flag for investors who would not invest in your startup thinking our horizon is too limited.
10. Too much Reliance on Patent protection
Some of the best startups are the ones that have an open-door policy where employees are encouraged to challenge the company management and ask questions. At Facebook Mark Zuckerberg spends a few hours every Friday answering questions from employees. You should be concerned if your CEO does not foster such an open environment
5. Friendships with VCs
VCs who invest in your company are interested in you as a COE and Founder to execute the Business Plan. They are not interested in friendship and if you miss your deliverables, they will not be shy to repalce you. So, dont be consumed about creating a chummy relationship with your VC above and beyond a busienss relatisno.
6. Company Control
Once you have raised substantial funds, you have practically hired yourself a boss and lost control. Regardless of how much of the company shares you own, your VCs can significantly influence the direction of your company using the money they have invested in your Startup.
8. Believe VCs add Value
Successful companies provide well-defined programs for the advancement of their employees. They also offer employees training and mentorship programs to help them advance. Your startup CEO should be an advocate of such programs.
9. Believe VCs add Value
Successful entrepreneurs develop the understanding that a VC is just a source of funding and they are not interested in running your company. VC can arrange introductions and offer help. But at the end of the day, it’s up to the CEO and team to execute the business plan.
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