What are the Most Common Mistakes that Entrepreneurs Make?
Jun 27, 2023
Here is a short list of others, because there are hundreds:
- Assuming you can raise capital before you have a product, most cannot.
- Not building a team of 2–3 founders who can work for cheap or free for a year. You need this to build an MVP. This team needs marketing, sales and technical skills, not just product development, as the vision needs to be complete with a sales and marketing plan that requires senior expertise.
- Not doing sufficient market research and competitive intelligence to understand the target market and customer. Many are so paranoid of their idea being stolen (ideas are worthless, BTW) that they fail to validate their product/service.
- Pure arrogance and stupidity, yes, this may be 50%. They believe they can get others to do the hard work they need to do and keep the company. Some even believe they can just hire a CEO and give them 10% and keep 80% for themselves. Why would any experienced CEO ever do that when ideas are a dime a dozen, and they can just start their own company? Unless you bring literally millions in capital, that is a fool’s errand, and you will fail.
- Little to no management and leadership experience. You need no less than 3 years, and it is better to have 5 to 10 managing, hiring, firing and leading people.
- Not a big enough vision and plan. The best investors need to see a company that can have $50M to $100 in revenue in 5–6 years. Failure rates are the same so even novice investors look for big markets (TAM).
- No financing strategy. They just say I want $1M when there is no value in the company from team, product, plan and market research done. This is what creates a pre-money valuation. A real financing strategy is 3 rounds over 5 years when each round increases the valuation of the company by 2X to 5X because a key risk is eliminated. This is how investors make money and new money for scaling and growth comes in too.
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- Not realistic. Especially young people under 30 have crazy expectations due to our failing school system and “everyone gets a trophy” mentality. I had one new college grad ask me last year if I could “Coach me to be a billionaire but next year”. Now not only has this never happened in the history of the world, but it took Elon Musk 12 years and beat the odds three times to achieve a $1 billion net worth, after he invested $140M from a PayPal sale into Tesla and SpaceX.
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- Not getting a serious mentor that was already a successful CEO, and ideals a Serial Entrepreneur with a few exits. These are the only people on the planet that have done it enough to help in any area and help avoid the thousands of ways to fail.
Bob Norton is a long-time Serial Entrepreneur and CEO with four exits that returned over $1 billion to investors. He has trained, coached and advised over 1,000 CEOs since 2002. And is Founder of The CEO Boot Camp™ and Entrepreneurship University™. Mr. Norton works with companies to triple their chances of success in launching new companies and products. He helps established companies scale faster using the six AirTight Management™ systems. And helps companies raise capital.
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