The Million Dollar Tattoo

Learning how to turn ideas into action

3 Mistakes of First Time Entrepreneurs

I’ve spent a few years learning about entrepreneurship through as many books, videos, blogs and discussions as I could handle. There are millions of great resources for an aspiring business person to make the most of, and now that we have access to information at the tips of our fingers via the internet there is no excuse not to learn as much as possible.

That being said, there is absolutely no substitute for jumping into a project and getting your hands dirty. I’m a great believer that practical knowledge and experience are the best teachers, and I can attest that I have learned so much in the past 2 years that could never be taught by theory. Of the many lessons that I’ve learned the hard way, the top 3 have been:

1.) Not choosing the right team members.

I was so eager to launch my business that I didn’t take the time to carefully evaluate who I was working with. Personality types, work ethic, shared values – these are all facets of team member that will make or break the combination. On several occasions I found myself in awkward situations due to my carelessness. For the first time in my life I found myself in the position of having to fire someone. At the age of 26 I had to remove someone who was almost double my age. It became very messy as he was a shareholder, and in the end it took over 6 months to resolve the issue. All of that could have been avoided if I’d taken more time, trusted my instincts and placed the emphasis on finding the right person for the job than just filling up a position.

2.)  Not Spending Money

There’s a fine line between between being pragmatic with your finances and just being tight. The first time I attempted a start-up I vastly under-estimated the amount that would be needed to get the project off the ground. I tried to bring people into the project for free in exchange for equity and hardly spent a dime for the first year. Some people may say that’s the way a start-up needs to be run – and in many ways they would be right, but not spending money means that you either need to be able to build the business from scratch with your bare hands (I’m not a techie), or you need a team of highly-dedicated people. I’d like to say that the project crashed-and-burned spectacularly, but it took so long to get anything done that it kind of faded away dismally. Now on my next project, by spending real money, I’ve made more progress by myself in 4 months than I did with a 5-man team over 2 and a half years!

3.) Having a Business Idea – not a Business Model

Just because you have a great idea does not mean that you have a viable business model. One of the biggest mistakes that I made was thinking that because the idea I had was cool I could turn it into a profitable business. I spent hundreds of hours on the concept, refining the core service and adding cool features here and there, yet it wasn’t until I was challenged by a potential investor that I realised I didn’t have a viable business model. There’s something to be said for creating something cool or useful without necessarily focusing on turning a profit, but without a way to generate returns what you end up creating is a hobby, not a business. I believe that it’s very important to work on a model for financial success right at the beginning of the idea cycle. The financials don’t have to be rock solid 5 year projections (they will be wrong over any period longer than 6 months – a year if your lucky), but at the very least they should give you a good idea of whether it’s worth investing your time, money and energy into the journey.

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1 Comment»

  bendedspoon wrote @

thank you for this one
this can help me eventually
🙂


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