In my last post I talked about the traps entrepreneurs face with respect to cash (not planning it well enough or managing it rigorously enough) and being your own boss (which means you might not have coworkers to help you make decisions). If you missed the post, go read it here.
Today I’ll cover two more traps that can ruin your business faster than Takeru Kobayashi can destroy a Nathan’s hot dog.
If you’re an entrepreneur you likely have a cool idea for a product or a service. That knowledge and innovation is the core of what you’re about. You somehow intuitively understand a market need and that’s the source of your success. Or failure depending on how you play it. That’s the third trap.
The fourth trap is that as the Big Cheese, you don’t need to sweat the small stuff. You’re the king of rock. There is none higher. Sucka MC’s better call you sire. Well guess what your majesty? You DO have to sweat the small stuff. All of it.
Let’s explore these two traps, shall we?
You’re NOT the Market
I love startups. I build them. I run them. I invest in them.
I’m part of an investor group that regularly evaluates and puts money into new ventures. Part of that process involves the entrepreneur pitching their idea to the investor group. Every time we meet, we see some very cool ideas.
There’s one guy in the group I wanna sock in the mouth every time we meet. Why? Because he falls into the trap of thinking he’s the market. Here’s how it goes:
Entrepreneur: “My business sells foozygiggies to prevent 13 year olds from calorphinating.”
Mr. I Think I’m The Market: “Well I don’t think this is a good investment because I would never use a foozygiggie because I never calorphinate.”
HEY MORON! YOU’RE NOT 13! YOU’RE NOT THE MARKET!
When we mistakenly layer our purchasing behaviors on a product when we’re not the target market, we make bad decisions. For example, I worked with a financial services firm that targeted their product at the 18-25 year old African-American community in the southeastern United States. My job was to evaluate new product features. I’m a 39 year old white male from Ohio. I probably shouldn’t rely on a lens of “would I think this is a good feature?” to make my decisions, huh?
So how do you avoid this trap? ASK YOUR CUSTOMERS/PROSPECTS! They’ll tell you (sometimes quite pointedly) if your product or service is compelling. Using yourself as “the market” can be disastrous.
The Big Cheese Dynamic
Congrats! You’re in charge. You no longer have to do the menial work. You have the luxury of focusing on high-falootin strategery and stuff.
You’re dead. You will kill your business with this mindset. You need to know (and sometimes manage) ALL the details when your venture is young. A few examples from my recent experience (and the tragic outcomes I probably avoided by not acting like the big cheese):
– I negotiated a major contract with a client. It had a clause in it that would have given that client unrestricted use of my firm’s intellectual property including the right to give that content to other companies so they could teach those courses to my client. I found the clause because I read EVERY clause in that contract. I struck the clause. Had I failed to be our corporate counsel, I would have disintermediated myself from that relationship (and would have given prospective competitors access to my intellectual property).
– A few customers of our ticketing venture TiXiT were having problems with a link on our site. It wasn’t allowing them to make purchases (translation: we were losing sales). I played customer service rep and IT troubleshooting team. I was sending emails to those customers to update them and I worked with our partners to resolve the technology issue. We fixed it. The customers made purchases and now they’re telling their friends how great we are. Had I not gotten into those details, we would have lost those sales, those customers, and built ill will toward our company.
– I’m our travel agent. One time I forgot to make a car rental reservation. Guess what? Due to a snow storm the rental agency had NO cars available. I had to catch taxis, buses, and mule carts to get to the client and then back to the airport. It cost me extra money and could have caused me to miss a client engagement. Small detail. Big problem. No one to blame but myself.
You have to manage the details my friend. Don’t do so to the detriment of managing your strategy and your people but do realize the implications of failing to manage those seemingly “small” issues.
To recap: you need to be maniacal about cash flow management, you have to set the direction for your company and be self-directed in your work, you are NOT the market, and you have to pay attention to those critical details.
Sadly, doing the above only keeps you from destroying your business. They’re table stakes to play the entrepreneur game. There are many other things you need to do to thrive but the first of those things is to not implode.
Good luck folks! Please share other traps you’ve seen entrepreneurs fall into so others can avoid those traps.