In these difficult economic times many business majors consider starting their own enterprises. The lure of becoming the next giant of industry seems worth the inevitable challenges. Also, people more and more witness the success of startups and the failure of traditional companies. They often leave business school with the desire to create the next "big thing."
The problem, according to entrepreneurial guru Guy Kawasaki, is that most independent businesses fall victim to the same mistakes. So, to help people avoid making errors, here are the 10 mistakes of entrepreneurs, as stated by Mr. Kawasaki in a presentation at the prestigious UC Berkeley Haas School of Business.
1. They Forecast Profits by Multiplying the Market by 1%
The hope is that doing so will impress potential financiers. However, no investor appreciates such a small portion of the larger market anyway. So, it is best to just accurately forecast probability of success.
2. They Think Venture Capitalists are Friends
Nope, Kawasaki says just stick to making the proper forecasts and delivering the profits. They only want to see returns. Leave it at that.
3. They Prepare Long Presentations
Nobody gets through with 10 PowerPoint slides of 30 font in 20 minutes, finds Kawasaki. It is wise to prepare a more concise sales pitch.
4. They Use Words to Make Pitches
It is not best to rely only on words to make a sales pitch. Entrepreneurs who show up with an actual product prototype have better odds of success.
5. They Think 51% is Control
Too many business startups think they are in control if they just keep a majority of the shares; in reality, any group with a significant portion of ownership can cause problems. When you take outside money, you give up complete control.
6. They Scale Too Soon
Wait to scale only when needed. Otherwise, there is a risk of being stuck with overhead and not enough money to cover the costs.
7. They Try to Raise Too Much
Ironically, a lot of money can be a problem. New businesses, in particular, tend to get wasteful when they have large reserves.
8. They Obsess With Partnering
Getting others to share the burden of running a company seems logical. However, focusing on acquiring partners can obscure the real reason for the startup, which is to make money.
9. They Hire Like-Minded People
The better course of action is to create a team of diverse thinkers. A room full of similar types can stifle creativity.
10. They Do Things Step-by-Step
It is better to complete things as needed. Business is a cycle. Entrepreneurs should be doing a variety of projects at once.