Running your own show takes confidence – but be aware of your limitations.
I like this piece by Martin Zwiller of Forbes.com who makes some relevant comments on business leaders – each example he gives is recognisable from the hundreds of entrepreneurs we’ve met.
With the new year dawns new hope. Some will hit the treadmill. Others will clean out that musty closet or dump their loser boyfriend. And still others will muster the courage to leave their still-limping employers and strike out on their own.
Starting a company is scary stuff in any environment. It takes vision, capital, courage, conviction and, yes, even a touch of arrogance. Indeed, lack of confidence can kill a young company. But so, too, can thinking you’re all that when you’re not.
Here are 10 arrogance traps aspiring entrepreneurs should avoid.
How to strike the right balance between confidence and arrogance? Start by avoiding the following classic traps. I wish they were clichés, but sadly they aren’t.
1. “Business plans are for dummies.”
Think business plans are just for investors? Wrong. Those plans are primarily for you. Compiling a business plan forces you to think through the fundamentals, from financing to marketing. The plan also communicates the same vision to employees, lawyers, accountants and other key players.
2. This is so cool!
Just because you think your new mousetrap is extraordinary doesn’t mean the whole world will agree–or at least agree enough to pay a price that translates into a profit after manufacturing, marketing and distribution costs. There is no substitute for understanding the market and sizing the opportunity before you place your bets.
3. If we build it, they will come.
The hot term these days is “viral marketing,” meaning “We won’t do any marketing, but our product is so great that everyone will know about us anyway by word of mouth and through online social networks.” Reality: Viral marketing only takes off after you prime the pump with real marketing–and real marketing dollars.
4. We have no competitors.
Venture capitalists and angel investors (and me!) hear this one all the time. Cold truth: If you haven’t identified a competitor—in the form of a maker of a similar product or service, or the provider of a different product or service that might serve as a substitute to yours—you either 1) haven’t looked or 2) there isn’t any market for what you are selling.
5. We have more features than anyone!
So you wrapped all the features of Facebook, MySpace, Twitter and LinkedIn into your new social networking software, and you’re wondering why everyone isn’t flocking to it. Truth is, marketing a flurry of features often puts off customers who would rather not have to deal with complexity, or the costs to switch to a new product or service. Simple sells.
6. We have the first-mover advantage.
Right. Or, what you really mean, but can’t admit, is that you don’t have a patent or any differentiating competitive advantage. So be honest: Which is it?
7. There’s no need to risk my own money.
Investing your own capital is, in the eyes of investors, the difference between “involved” and “committed”–and investors like commitment even more than they like sweat equity.
8. Me, myself, and I.
I recently watched a promising start-up wither and die for lack of funds because the founder refused to step aside as chief executive in favour of a more experienced candidate, a condition of a $1 million venture capital investment. I reminded him that, within the stipulation he could easily kick himself up to Chairman, but he wanted it all. So much for ego.
9. We’re funded, now we can relax.
The real work starts when the money comes in–tasks like managing budgets, hitting milestones, inspiring employees and, yes, keeping investors happy.
10. We’re too nimble for the big guys to keep up.
Usually the reason large companies don’t seem to pose threat is that the market opportunity is too small to have much impact on their prodigious top lines. Serving a relatively small customer base well can yield a tidy little business, but don’t be fooled into thinking you’re going head-to-head with the likes of IBM and Microsoft–and certainly don’t let investors think you’re fooling yourself, either.
Forbes.com, Martin Zwiller