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Werner Heisenberg, the discoverer of the Uncertainty Principle, couldn’t have said it better. The only sure thing in life, and in business, is uncertainty. In 2011, the only entrepreneurs who have a reasonable chance of success are those bold risk-takers—who embrace uncertainty, who stay ahead of trends, who are comfortable with chaos and who transform their strategies into workable plans and actions.
But there are a few exceptions to the Uncertainty Principle of business; we can point to a few actions that do result in certain outcomes. ChubbyBrain (www.chubbybrain.com), a website that offers data-driven tools, online business guidebooks, and blogs, has posted a list of the top 20 ways to make a start-up fail. If you make enough of these top 20 mistakes, the failure of your startup is virtually certain.
Seven of these business mistakes are particularly lethal if you’re starting or expanding your business.
The first deadly mistake could be called “Location, Location, Location.” You make this mistake when you start your business in an unfriendly location—with low customer interest and little or no local community support. Conversely, if you start your business in a location where you have an abundance of potential customers and a baseline of interest in the community, then your chances of success rise. For example, if your company sells cold-weather gear, you’ll probably have a better chance of success in Chicago, the Windy City, than in Atlanta or Phoenix. And the location of your workforce matters, too. It’s tempting to believe you can have employees working out of remote offices in little towns across the globe. Unless you’re careful, though, this kind of setup results in scattershot communication, missed cues and poor teamwork.
The second deadly mistake consists of letting your organization get “outcompeted.” While entrepreneurs should not let obsess over competition, it’s a good idea to analyze your competitors before starting a business. If a given market is already saturated, then you might consider selling something else. If every bakery in town is specializing in premium cupcakes, for example, maybe it’s time to start making premium popsicles….an option chosen by Summer Bicknell, who now has four highly successful Locopops outlets in the Raleigh-Durham area.
The third deadly mistake is lack of focus; that is, getting sidetracked with too many good ideas when you should be focusing on the central elements of your business. Starting and maintaining a business is time-consuming and resource-intensive. There is neither time nor money for seductive distractions that drain resources away from your central mission.
The fourth deadly mistake consists of losing the connections to your network. For example, in the cases studied by ChubbyBrain, almost 16 per cent of startups attributed their failure to the fact that they didn’t fully utilize their network of connections. The take-home message: don’t impose on your friends and business associates, but don’t neglect them, either. Network, network, network.
The fifth deadly mistake happens when entrepreneurs don’t cut their losses in a timely fashion. If a product doesn’t sell, or if an idea doesn’t work, you have three choices: fix the product or idea, ditch it, or let the problem linger while it bleeds resources away from your organization. Nearly 20 per cent of the unsuccessful entrepreneurs in the ChubbyBrain study attributed the failure of their businesses to their inability to change quickly enough to cut their losses. Kill your losers….faster than you think you should.
The sixth deadly mistake is poor marketing, which was a primary cause of failure in almost 30% of the unsuccessful startups. Obviously, if you have a product to sell you must recruit customers to buy it; but marketing is hard work and often product developers have neither the talent nor the desire to go out and promote that product. Solution: hire someone who can market the product.
The seventh and deadliest mistake is being inflexible and ignoring customer feedback. This was the leading cause of failure of businesses in the study. And, while there are many ways to determine what customers like and don’t like, you could start by doing something much simpler: by listening to what the customers have to say.
The entrepreneurs who made these seven deadly mistakes didn’t deliberately set out to fail. In hindsight, they saw all too clearly what they did wrong. But foresight is better for your business than hindsight; if we know in advance about mistakes we’re likely to make, we are more likely to be able to avoid them.