4 Founders ' introspection: 6 costly mistakes in the early days of entrepreneurship

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The Rodney Nelson Brothers of Woolly pocket

Let's tell a little story first. Like every entrepreneur, Rodney Nelson needs an excellent website. He and his brother Miguel Nelson then created the company woolly Pocket, mainly to sell the cleverly designed green flower wall online. But when they created the company, they ran into a lot of problems.

Rodney Nelson (who is also Phoenix's management advisor) remembers, "Our first website did not follow the common website standard design plan". The site is difficult to navigate; the customer has to drag the scroll bar to the bottom of the homepage and then to the next page to find "buy now."

The brothers had to turn to a developer, but their second electric-business web site didn't work well, and they found it hard to get the tech team to respond quickly. "We're paying less than 7000 dollars, but we have to redo it after six months." "It cost us 15000 dollars for the second time," said Rodney, "and we were more satisfied with it, but we were less than ecstatic." About a year later, we went to find another company. We made three websites in the same year. Finally, we did four websites before we actually built a website that worked effectively. ”

It's not the site you want to end up with a major loss. But you have to know this: anything that could go wrong is going to make a mistake-it's Murphy's Law of startups. There are countless ways to start a company, but it's impossible to spend all the money wisely. Some common, costly mistakes could put self-reliant companies in dire straits. 4 of American entrepreneurs have made their own comments about traps they think need to be guarded against, and advice from experts on how to avoid these pitfalls.

Error 1: Wrong team selected

The managing director of the Martin Trust Center at the MIT Entrepreneur Association (MIT Entrepreneurship) and author of "Self-discipline entrepreneur" (Disciplined entrepreneurship), Bill Violet has said that choosing the wrong team is an expensive mistake that entrepreneurs make, not only to lose your income and time, but also to deplete your morale.

"Choosing Who to hire and who to work with in a startup is like playing basketball on the playground, you can call your friends to play, but if you want to be the best team and have a long ride on the pitch, you have to choose your team carefully." "he explained.

It's important to choose people with different skills. However, Bill Olette said, "Like a great team, they must have shared values and the ability to trust each other in difficult situations." This is why, under pressure, you have to work with your co-founder and early employees to gain experience, which is more important than your usual friends. ”

Error 2: Unreasonable pricing strategy

"My first business was a handbag company, and its biggest mistake was pricing. "said Sarah Shaw, chief executive of Entreprenette, a consulting firm at Colorado State Durango. Her mistakes are a common mistake for startups that produce a product.

Sarah Shaw, Entreprenette.

"I didn't understand at first that you had to calculate the area of the fabric, including the discarded fabric, for any kind of clothing or jewelry." Sarah Shaw explains. Without an accurate understanding of the cost, she would not be able to price the product correctly.

"I thought it would be a good thing to add one more price to the cost, but that's not true," he said. "she said. "From the cost to the wholesale, we have to increase the price by 2.5 times times on the basis of cost, because it includes the cost of marketing and exhibiting, that is, I sell it for all the expenses." ”

As a result of the mistake, Sarah Shaw has invested more than 100,000 dollars in her own capital by the end of the first two years of her business. With perseverance and media acclaim (celebrities like her handbag), she ended up earning 1 million dollars and attracted investors, but she was still unable to recover from the recession after 9/11 and shut down the business in 2002.

Sarah Shaw misunderstood her first venture-the cost of a handbag company

Like Sarah Shaw, Tobin Bousse (Tobin Booth) paid dearly for pricing mistakes. This happened in 2010, when the california-based company designed and built a solar photovoltaic system and received a contract to install solar installations for retail stores in eight states.

"In a very competitive market, this order for us is a complex situation we are not dealing with, and we have no experience." "he said. "We don't understand how much the tax problems and labor costs of all these states have changed." We have not considered the problem of delay in the installation time due to weather and transportation. ”

He didn't take these into account in pricing. His company did not expect the project to be delayed, resulting in a storage charge that lost about 500,000 dollars in 2011. Tobin Bousse said the mistake was the worst of his entrepreneurial experience. But he also learned something positive: "cliché" is absolutely right: the value of pain is the experience you can learn most from it. ”

Error 3: When you achieve excellence, expect perfection.

When you have a "golden" idea, it is natural to introduce a fully formed idea to the world. But you don't need an accountant to understand the truth: the longer you need to start a project, the longer you'll be able to make money.

"This is a common mistake, especially for technicians. "A lot of people want to create an app that doesn't make it work until it's perfect, but on the other hand," said Drew Williams, co-author of the Beast to raise cash to fill the bottomless pit of startups. The time you need is too long and the cost is growing. "In particular, this error may cause you to lose the" track "-The amount of money you need to keep running before you are ready to put the product into the market and develop the customer.

"You need to come up with the simplest, basic version of the product, make your thoughts clear, and try to find someone who can sell your product to him or her." "Dru Williams said. "Find one or two customers who are willing to try first, and then create, test, and repeat improvements to your product." Inevitably, your product will be different from what you expected and the final product. But if you can get a real customer who recognizes your value and has a positive effect, you can create a better product in a cost-effective way. ”

Error 4: Not understanding Technology

Traklight is a software company that helps individuals and businesses identify and protect intellectual property, but founder Mary Juetten doesn't know anything about the company. "I know how to show our software features, but I don't know everything about coding or website development." Mary Juetten said. She is a certified public accountant and a Canadian chartered accountant.

Traklight Mary Juetten

She relied on a co-founder who had technical experience. But when their relationship ended, she got into a lot of trouble. "This is the biggest mistake I've made: I'm looking for the best business people, but I'm not letting myself know about different programming languages or getting responsible people into the team." ”

The team she hired to create the Traklight software told her that "you can't" do it in some programming language and "must" in another language. "If the person who designed my website came to me and said, ' You should use the opposite color ', I'll at least ask 17 ' why '. "Juetten said. "But I never ask why, because it's technology, I don't understand." ”

As a result, the four-month window period became eight months, then nine months. "With technology, the next step is to get into marketing." "she said. "So, non-tech entrepreneurs should be trained accordingly." ”

Eventually Mary Juetten a course called "Technical lectures for entrepreneurs". She advises other entrepreneurs who need more expertise to look for similar introductions on Codecademy (online learning programming website) or general Assembly (short-term Training School).

Error 5: Ignoring legal aspects

The Tobin Bousse of Blue Oak Energy (Polaris Solar photovoltaic), mentioned above, not only needs to redesign its own interstate ordering pricing strategy, but also regrets that he has reduced legal costs in the early stages of the company.

"If I could redo something early, I would pay thousands of dollars for a lawyer to write a proper contract," he said. "he said. "I regret not finding the right lawyer to really understand my business," he said. ”

Because some early customers didn't pay at all, Tobin Bousse tried to transfer these issues to the receiving agency. "I found that there were some terms in the contract that didn't allow me to go to a lawyer. "Tobin Bousse said. Fortunately, the problem has been solved, and now his company has a yearly income of nearly 20 million dollars.

Meanwhile, Sarah Shaw has unwittingly signed a contract to register her name as her handbag company's trademark. So when the investor joined in, she found that her name belonged to them. "As a result, I can no longer use my own name in the business." "she said. "I can only hire a lawyer to watch out for this problem." ”

Error 6: Save money on marketing

"A lot of people think that everyone has to be forced to sell their products or services, but I don't think so, because it doesn't work that well." "Dru Williams said. There is also a related saying that you can rely on social media to build viral marketing and attract customers free of charge. "This is not true, and social media is not free," he said. "he said. "And if you want to do well, it's going to take incredible time, and even if you're only going to get the slightest boost, you'll usually spend six months to a year promoting marketing-that's not fast." ”

If you're not sure how much the marketing budget will cost, Dru Williams suggests that you can set it at 10%-20% of your target income. "When you become a more mature business, the marketing budget will fall to 5%-10% of total revenue, and for larger companies, the marketing budget is usually below 5%." "he said.

After creating the Traklight, Mary Juetten found that the search engine did not establish the correct index of her site. "No one is searching for us. "she recalls. So she decided to pay a professional company to do the website marketing plan. "The first payment is terrible for a small company like ours, but it's also a good deal because we don't have to pay developers to reinvent our site, and they can do email marketing and customer relationship Management (CRM) for us." "she explained. So far it has played a positive role: in April 2013, the Traklight website records only 100 people a month, and by the end of the year has reached 2800 per month.

Mary Juetten estimates: How much did she lose from her early detour to software development and marketing? The dollars that were thrown away--the checks I had for the useless stuff--should have hit hundreds of thousands of dollars. "She admits. "As for the lost time and the loss due to the failure to develop the product in time, there are also hundreds of thousands of." But we will now greatly accelerate the development of the product. ”

Finally, the best way to avoid costly mistakes is obvious: save money and spend wisely. "To really strictly control spending, spend the money on the edge." Dru Williams suggested. "Use all the things you can to create opportunities for yourself." ”

(Via:entrepreneur, pioneering state compilation; The entrepreneur content authorizes the pioneering state exclusive cooperation, do not reprint without permission