by Jim Martin
When you get a great idea, everyone tells you to rush ahead. They tell you it will make you rich and famous, or at least rich. It’s great to hear that. It’s wrong to believe it prematurely. The truth is that, no matter how brilliant the idea, success falls to those who work the hardest and make all the right decisions. Intuition and enthusiasm can’t replace forethought and planning. Let’s look at a few of the key mistakes you could make.
Mistake One: My Great Idea is All I Need. In truth idea is worth maybe 1%. Execution is 99%. To execute, you need to assemble a good crew around you. Bill Gates and Steve Jobs drew some brilliant people into the early core of Microsoft and Apple. Your idea won’t take care of itself. Organize and get some good help.
Mistake Two: We’ve Been Friends For Years; We Don’t Need a Written Agreement. Before you put a company name on the door, get everything in writing. This goes beyond simple C-Corp, S-Corp, LLC, etc. questions. Only a partnership agreement creates legal accountability. People have different motivations. Your partner may have different goals. The effort invested informally defining responsibilities and authority before you start prevents major headaches as the firm grows.
Mistake Three: Don’t Vet Your Partners. Your partner may be a great father, great husband, outstanding citizen and a handicap golfer. None of that has any relevance to running a business. Starting a company requires major sacrifices from all involved. Employers do reference checks on potential workers; why wouldn’t you do a reference check on someone more important to the business than a clerk or CPA? You have to ensure your trusting your future to someone with business acumen.
Mistake Four: Worry About The Business Plan Later. This is the worst mistake, the potential business killer. If you have a business model from day one you can plan where the money will come from and where it will go. Without financial foresight, you will eventually have to sell your company (usually at a loss) or plead for investor funding (which will require a good business plan and ultimately some loss of control). A good business plan enables you to successfully pursue your dream. With no realistic plan, you later pay legal, marketing and overhead fees from your own pocket. That makes partnership disagreements more likely.
Mistake Five: Offer Every Feature Imaginable. While it seems great to offer everything you can think of to your potential customers, you should do so in phases. Doing too much at once will leave everyone overworked and frustrated. That usually leads to a bad marketing message and nervous (read reluctant) customers. To build a business, do what you do well, keep that simple, then expand it as the time to do so becomes available.
No business will prove to be perfect. Those that are willing to start out flawed won’t survive long enough to even appear perfect. If you need help eliminating those flaws, I might add that Mistake Six would be failure to get yourself a free SCORE mentor.