5 Mistakes I Made as an Entrepreneur (and what I learned from them)
This is a guest post by Nicholas Rubright – Nicholas shares his experiences of starting up a company and some lessons learned. Worth your time to check it out. You can see more information on Nicholas at the end of the post. Thanks Nicholas – Shawn Kinkade Kansas City Business Coach
As an entrepreneur, I probably made every mistake in the book.
When I was in college, I set out to build a music streaming service that ultimately failed.
There are a number of things that contributed to the failure, including the competition from services like Apple Music and Spotify that had millions of dollars in the bands, but most of it had to do with my own string of mistakes.
To help other entrepreneurs avoid a similar fate, here are 5 mistakes I made during my first startup and what I learned from them.
1. Outsourcing my businesses core competency
When I first started working on my app, I didn’t know anything about programming.
My initial thought was to learn to code myself, but when I started searching Google for things like “how long does it take to learn to build an iPhone app,” I quickly became intimidated by the answers.
Programmers who were 5-10 years in were saying they were still learning. Being as impatient as I was, I outsourced the work.
Due to high demand for programming, hiring programmers is extremely expensive.
However, my mistake wasn’t just in the cost to build the app, but when I realized how expensive it would be to maintain an app, I knew I wouldn’t be able to afford to keep paying a programmer to do this for me.
Having run out of money, I decided to learn programming and build the app myself. Far from the 5-10 years many people said it would take online, it took me around 3 months.
If you’re going to start a company built on technology, you need to be the person behind the technology so you can iterate, fix bugs, and add new features quickly without running out of money.
Takeaway: When starting a business, you need to be the expert in the core competency of the business.
2. Not being picky enough about who I work with
Hiring great people for any task is the hardest thing you’re going to have to do as an entrepreneur.
When hiring freelancers to build my app, I’d gone through 3 different programmers before I found one who did even an okay job. This got expensive quickly.
It’s important to be extremely picky about who you work with. Hire slow, fire fast.
This goes for any type of business. For example, if you’re running an eBay dropshipping business and are hiring people to post product listings for you, you may want to pay close attention to things like their spelling when they communicate with you, how they organize their emails to make them easier to read, weather or not they have previous ecommerce experience, etc.
Another important thing to pay attention to is reliability. If an employee or freelancer misses one deadline, fine, but if they’re regularly late on projects, it’s time to look for someone else to work with.
Takeaway: Hire slow, fire fast. Keeping a hold of bad employees who fail to meet deadlines or have a record of poor work performance will hinder your ability to grow.
3. Spending too much money too quickly
Before I even started the business, I incorporated in Delaware with a lawyer that charged me $2k because I wanted to set up founder shares (shares that give founders special voting power) for my business.
If you are setting up a business, having founder shares is a good idea if you have lots of leverage when in an investor negotiation, but it isn’t necessary to even set up a business before you have a product.
Another thing I spent way too much money on was hiring freelancers. Instead of hiring people, try and figure things out yourself during the early stages.
These are just examples of my mistakes, but there are many other ways startups waste money. If you don’t have revenue, do whatever you can to avoid taking on new expenses – especially if they’re recurring ones.
Takeaway: Avoid spending too much money early on during product development and testing stages. Save the money for marketing and growth when you know you have a good product.
4. Taking too long to launch
During the early stages, it’s important to maintain a lean startup mindset.
This means that you want to develop, launch, and iterate your product very quickly until you find something people love.
When I started my business, it took me 2 years to release my app on the App Store.
I was too afraid that if I launched the app with a single flaw, tons of people would download it, everyone would hate it, and I would ruin my reputation and lose all chances of ever growing the app.
Instead, I lost my chance to grow the app because I took too long to ever get it out.
When I finally did get it out, I found that my assumptions were all wrong. Downloads were near 10 per day – far from the hundreds of thousands I thought would come from my flawed “if you build it they will come” mindset.
Once I did get the app out, however, I was able to make quick changes based on actual user behavior and feedback rather than assumed behavior and feedback.
Had I released the app sooner, I may have been able to adapt properly before the market became too competitive.
Takeaway: Unless you’re in a business that requires huge upfront investments, don’t worry about your first version. Focus on getting the product out there and improving over time based on user feedback.
5. Focusing too much on fundraising
Too many entrepreneurs think fundraising is step 1 in building a company.
In some cases this is true. For example, if you’re opening a restaurant, you need money upfront for a location, staff, and cooking supplies.
For most online businesses, this isn’t necessary. You can easily build your product and get it out there without much upfront money.
I spent time looking for money because people continued asking me “have you raised funding yet?” as if it’s a requirement step in the process of starting a tech company.
Well, it’s not. When I finally figured this out, I was able to focus on my product and actually launching my app instead of trying to raise money for my non-existent product.
If you can build your business without raising money, do it.
Besides, the more your business grows without investors, the more investors will want to throw money at you, which means you’ll likely get a better deal.
Takeaway: If you don’t absolutely need to raise money to start your business, don’t. Build your product, get it in front of as many potential customers as possible, and see if you have a viable business model before you go after someone else’s money to fund your growth.
“Nicholas Rubright is the digital marketing specialist at SaleFreaks – a dropshipping automation tool that helps dropshippers automatically place orders when they make a sale. He has a passion for writing, marketing, and entrepreneurship, and likes to bring these things together by creating awesome blog posts like this one.”