Do you recognise any of these phrases?
- Here is my complete Business Plan now I’m ready to start
- I just need to find someone to lend me money
- This is what my solution will do
- My market is huge – nearly everyone
- If you have 10 minutes I’ll tell you about my idea
- I can’t tell you about my idea in case someone else does it
- I am working part time on my idea but don’t have any funds
I have met with hundreds of entrepreneurs and aspiring entrepreneurs over the past 5 years to hear about their business idea and what help they are looking for. It’s a great job, one that I love, but I often despair when I hear the same mistakes being repeated over and over again.
I feel privileged when an entrepreneur is happy to share their business idea because a common mistake is keeping an idea a secret and not sharing with anyone. Unfortunately some entrepreneurs are so worried their idea will be stolen by someone else, that they keep it secret for too long. Seasoned entrepreneurs know that most ideas are not truly original and the real challenge is bringing them to market. This is best achieved by sharing with other people (potential customers and partners) what the problem is that you are solving – although not necessarily how. There is a lot of really good help available for entrepreneurs to reduce risk and increase success so you shouldn’t try to do it on your own.
I despair when an entrepreneur presents me with their comprehensive Business Plan. The Business Plan should not be written until it is validated that there is a market, that the market is attractive, and that there is a business model that will deliver value to the customer, and capture value for the entrepreneur. A Business Model Canvas is a useful tool for mapping out the key elements of the business at an early stage and this can later be developed into a full Business Plan.
Another common mistake that people make is they don’t validate their idea or don’t ask the right questions. Invariably if you tell someone about your product, they will agree with you that it’s a great idea. This feedback is not helpful and can result in false confidence. The challenge is to ask questions that inform you about the problem you are solving, who has the problem, and how they currently get around it. This will lead to insights that help the design of your solution.
I love business ideas that focus on a small niche market that is not well served. Many entrepreneurs try to target as broad a market as possible, especially when offering a platform technology or service that goes across industries. Most successful platforms have started in a very small niche (yes, even Facebook) and after dominating that niche have expanded into other market verticals. Investors in startup are very wary of entrepreneurs who claim ‘my market is everyone’.
It is worth spending time to clarify what problem or pain your business will solve for your customers. The better you understand their pain, who has the most pain, and how they get around it, the better informed your solution will be. If you can’t describe what problem you solve or what need you are satisfying, then you will struggle to bring your idea to market. Good communication is important to sell your idea to others, to build a team, to attract investment, and to find partners.
It takes time and effort to develop a succinct statement of what your business does and why people want your product – the Value Proposition. Put yourself in the shoes of your customer and think about the benefits of your product or service. Too many entrepreneurs I meet cannot state clearly in less than a minute what their business will do. It is a common mistake to only describe your product. Again, I recommend the Business Model Canvas as a tool for clarifying the essential elements of your business idea. If you are at the idea stage, then use the Lean Business Model Canvas.
Finally, starting a business also takes time and effort. People who think they are entrepreneurs and do not commit their time and funds to their idea, will likely fail slowly. You can start a business these days with very little funds but you do need some cash and you need lots of time.
The best way to avoid these common mistakes is to use a start up methodology such as Lean Startup. Using the Business Model Canvas can help people with ideas to focus on the right things at the right time and avoid mistakes. The ecentre has an online course for New Zealand entrepreneurs to do in their own time at their own pace and to apply methodologies like these to their own business idea. For more information click here.