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Starting A Business
3 Crucial Mistakes Entrepreneurs Make Initially
Michel A. Bell
Many
entrepreneurs make three crucial mistakes at the outset.
They do
not pay sufficient attention to customers’ preferences; they ignore their
competition because their product thrills them, and third, they neglect to
follow their business strategy.
Indeed,
some have no strategy. Typically, these three mistakes entrepreneurs make
because they succumb to the pressure to show a quick return on borrowed funds.
Avoid
Mistakes Entrepreneurs Make: Keep Strategy Statement Simple
In
the January 2014 issue of Harvard Business Review (HBR) Roger
Martin identifies rules to prevent common mistakes when developing a strategy.
He states
in this article, The Big Lie of Strategic Planning, that the
first rule is “keep the strategy statement simple.”
Instead
of a long, often vague document, the company or entrepreneur’s strategy should
summarize the chosen target customers and the value proposition in one page.
Choose
Your Strategy Carefully
Crafting
the strategy needs time and thought, so the owner must be patient and learn to
filter the many unsolicited voices telling her how she can make money quickly.
I cannot
state enough how crucial it is to develop a simple strategy for the startup.
This simple strategy will be the guide to carrying out the owner’s mission or
purpose for doing business.
Harvard
professor and author Michael Porter, says strategy must be unique.
He goes on to mention that strategy:
· by consensus is bad strategy
· is not compromise; it’s clarity
· is about choices
· needs a set of uniqueness to help to differentiate you from the
competition
Porter
then adds that less than 25% of companies have a clear strategy.
Strategy
doesn’t have to be embedded in many pages, it can and should be plain and
simple.
In his
1985 book, Innovation and Entrepreneurship, the late
management guru Peter Drucker (1909-2005) said entrepreneurs create something
new, something different and have unique characteristics.
He said McDonald’s exemplified entrepreneurship; “they didn’t
invent anything any decent American restaurant hadn’t produced hamburgers for
years.”
Drucker
continued, McDonald’s asked:
What is
value to the customer? Then they standardized the product, designed processes,
and tools, drastically upgraded yields, and created a new market and a new
customer.
Drucker
said McDonald’s carried out entrepreneurship.
Whether the entrepreneur is an existing large institution, or an
individual starting her business single-handedly, the same entrepreneurship’s
principles apply. “The rules are pretty much the same, the things that
work and those that don’t are pretty much the same, and so are the kinds of
innovation and where to look for them.”
Focus
Your Strategy on Serving Customers
The
start-up owner often does not spend enough time finding out the value to the
customer of her product or service.
Neither
does she spend adequate time developing and testing her strategy. Instead, she
focuses on making a fast buck.
That’s
why it’s crucial the owner does the following:
1. Spends time understanding who are the customers
2. Identifies needs and wants, real and perceived, and target markets
3. Decides how to fulfill those needs consistently and at a high standard
4. Be patient and focus on the long-term. Research shows that family
owned businesses are more successful than non family owned businesses because
the former take a long view when making decisions.
Other
things owners are doing wrong include:
· Listening to too many people with divergent views about the business
· Trying to “save” money by not getting needed resources to produce
consistently high-quality goods and services
· Not taking enough time to raise adequate funds in the “proper” form.
Often, they take loans from family and friends without stating clearly risks
involved and repayment terms.
Starting
a business is risky but rewarding, and needs patience and courage. However,
heeding the above advice will increase the probability of success
significantly.
Michel A. Bell is a Christ
follower, husband, father, grandfather, preacher, professor, founder and
president of Managing God’s Money, and author of six books. After a two-year
journey to disprove Christianity to his twelve-year-old daughter, in December
1985, he surrendered his life to Messiah Jesus. Today his life’s goal, his
mission, is to teach stewardship of time, talents, money and other resources,
and preach God’s Word faithfully, as The Lord leads. Married to Doreen in 1970,
they have two children and five grandchildren. Michel and Doreen lived in
Jamaica, Japan, the United Kingdom, the USA, and several Canadian
provinces.
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