The 10 Most Common Mistakes Of First-Time Entrepreneurs

By VIVIAN GIANG

Building a company from the ground up is no easy task. That's why most entrepreneurs make mistakes along the way, and first-time entrepreneurs make the most. Unfortunately for many, the failure rate is extremely high —generally 50% to 70% of small businesses fail within the first 18 months. To learn from those who've been in the trenches, we combed through a recent Quora thread that asks: "What are the most common mistakes first-time entrepreneurs make?" 

Below are the most helpful pieces of advice for first-time entrepreneurs: 

1. Waiting too Long to Launch

Whatever the reason for this – not having the time, funding or being afraid that your business will fail – staying in this state of limbo is detrimental to your business. The longer you wait to release a product, the further you get away from your initial business plan. Not only does this mean revenue lost, it also means that creating a business that no one will support once you do finally launch.

As an entrepreneur, you’re going to make mistakes and there will be bumps in the road. Instead of worrying about these potential failures and over-thinking your business, go get your product out there and make adjustments as needed. Once you take this leap of faith, you’ll get one step closer to sustainable revenue.

 

2. Picking the wrong co-founder.

Choosing someone as a partner is a big responsibility, and it's one of the first choices you'll face when starting a new business. This decision is certainly impactful in terms of equity and satisfaction, so you want someone you can work with, says David Lawee, co-founder of Xfire. Be aware of your own skills and wisely choose someone who will be able to complement those skills.

3. Not understanding the skills needed to be CEO.

The skills that are needed to start a company are very different from the skills needed to grow it, says serial entrepreneur Gary Whitehill. As a founder, you need to be "unwavering, articulating, and executing" and have "passion and a clear and concise vision." On the other hand, CEOs need to understand "processes and protocols, human resource policies, and international partnerships."

4. Trying to make a product for everyone.

"He who tries to please everybody, pleases nobody," says entreprenuer Michal Ugor. Focus on your product, make it specific, and don't try to be like everything else out there.

5. Obsessing over the competition.

Don't try to build a product that already exists, advises Evan Reas, co-founder of Hawthorne Labs and former co-founder of ProFounder.

Reas quotes a famous saying: "If you spend all your time looking at your competition, your product will end up looking like your competition's ass." Don't watch what your competitors are doing too carefully, since this will divert your attention from the prize.

6. Not learning every side of the business.

Peter Baskerville, a vocation lecturer, says that the best entrepreneurs are the ones who understand that they need to be "very good at everything," meaning they can't only be good at leadership and ideas, but need to also understand the tech, sales, product, and marketing areas of their company.

7. Running out of cash.

"First-time entrepreneurs often fail to realize that every second of every day costs money," says George Kellerman, entrepreneur and angel investor. "Whether it is rent, salaries, overhead, utilities, or whatever, cash is constantly going out the door, and if you cannot bring cash in (through sales or financing), then you will eventually run out of cash and the game is over."

"Guard your cash like your life depended on it, create budgets, keep receipts, track expenses, know where your cash is going, and you'll be much better off," he says. In the beginning, focus spending on customer acquisition, hiring, and employee productivity.

 8. Getting too emotionally attached.

Yes, you put your blood, sweat, and tears into this company, but don't get too emotionally attached to an idea — especially if all the signs are telling you it won't work.

"Once you get emotionally attached to an idea, you lose objectivity," says Rajesh Setty, co-founder of multiple startups. "After that, you are in a bubble of your own looking at the world through colored glasses. You might even think others are 'not getting it' as it is obvious to you that you are right (and others are wrong)."

9. Not hiring the right fit.

At some point — usually around Series B — many CEOs will want to hire talent from big companies, says Kristen Koh Goldstein, CEO of BackOps.co. Although the hire might bring your company some attention, Goldstein says that CEOs should also keep in mind that "big company managers don't often know how to manage by influence." They are used to managing by hierarchy, which is "a toxic, silent killer of the early stage culture that is extremely collaborative, leading to rapid, iterative decision making."

"Too many CEOs make the mistake of putting smart people in leadership positions by assuming intelligence [equals] leadership," she says.

10. Not getting feedback from your customers.

Instead of asking your friends, VCs, and other entrepreneurs about your company, you should turn to your customers for validation, says serial entrepreneur turned investor Nabeel Hyatt.

"Treat your customers better than your spouse. Take your customers for granted, pay the price. Without customers, your company is a high school science project."