Biggest Mistakes that Entrepreneurs Make?

I need your suggestions. I'm working on a presentation titled "The Seven Biggest Mistakes Entrepreneurs Make" and so far I have only my top four.

Most of them I've made myself and I'm sure I can complete the list, but it would help to have some consensus from other entrepreneurs and their consultants/advisors.

From your experience what are the most common mistakes and what do you recommend to avoid or fix them? I would appreciate your input.

For some hints, but here’s my list to date:

1. Neglecting strategic vision, too entrepreneurial/opportunistic/reactive/intuitive
2. Not knowing and managing your numbers
3. Neglecting key strategic relationships
4. Letting the product sell itself, poor marketing and sales support

Others have already offered:

5. Hiring too fast, firing too slow
6. Poor communication with employees
7. Under capitalisation
8. Poor research and planning
9. Neglecting to manage cash
10. Too corporate, no personality

And more…. So now it's your turn.

Thanks.

How are we doing so far in 2009?

We could all be even worse off, but let's hope it gets better from here. For most of us the impact on our businesses has been inconsistent and inconclusive.

What are the right management strategies and action plans to get through this economic turmoil with a more resilient and successful business?

Here are the lessons we have learned from clients, commentators and other experts, so far:

1. Do not rely on the headlines.

They are just trying to get your attention and a train wreck is more interesting than a success story. They will not provide either balanced or insightful input to your planning or decision making. You will have to dig deeper. Make sure your market data and competitor intelligence is current and accurate.

2. Communicate Communicate Communicate.

Keep employees and customers informed. They are worried, confused and need to be reassured that they can count on you. Unfortunately, you may not have good news for them, but it will be appreciated that they are hearing directly from you and are not left guessing what's next.

3. Keep on Selling.

Now is not the time to cut back on marketing and sales. Your efforts now will be more even conspicuous and effective as your competitors back out of the market and away from their customers. Be selective and very focused. Work on building stronger customer relationships by being relevant and responsive to the current economic circumstances. Avoid the “cry for help” advertising that only confirms “we’re desperate and need the sales”. Calmness, confidence and competence are much more appealing to those potential buyers who are still spending and want reliable, long term suppliers.

4. Do quickly what obviously needs to be done.

If it’s clear to you it's also clear to the people affected. They are waiting for you to act and will be more confident and proactive themselves if they see you taking action. Face the facts, don't fight the facts.

5. Adapt.

Remember Darwin's "survival of the fittest": those who adapt to their environment are most likely to survive; not the strongest or the biggest. This is not the time to be stubbornly persistent about your plans. Look around and be creative. Your destination may still be the same, but the route, the vehicle and the passengers may need to be changed.

6. Be confident, but cautious.

Recognize the difference between calculated risk and a state of uncertainty. Make a decision if the potential outcomes and the percentage probabilities are reasonably clear, but hold fire if they are not.

7. Show conspicuous leadership.

President Obama understands the concept of being the conspicuous spokesman for his plans and policies. No one can do it better than the one who is ultimately responsible. We may not all be as adept communicators as he is, but we can all speak with more sincerity than any spokesperson or intermediary on our concerns, our strategies and our plans.

Good management will be tested during these times, but good decisions now will mean a better business for the future. Keep at it. This too will pass.

You be the judge

Each January presents the opportunity to participate as a judge in the annual Concordia MBA International Case Competition. Thirty-two university teams of enthusiastic and ambitious young MBAs analysing, strategizing and recommending solutions to the corporate challenges that they are presented.

It does raise the question in my mind of encouraging the arrogance of MBAs to think they can solve corporate issues in a quick study without any relevant experience. Imagine - if they can solve these cases in two hours, what could they do in a couple of years as CEO! Brings me back to Henry Mintzberg and the admonition to focus on creating better managers not MBAs.

Relevant prior experience is the first requirement before embarking on the study of management. The case study is a gross oversimplification of business dynamics and trivializes the need for industry and functional knowledge and experience in addition to leadership and management skills. Perhaps it adds some realism to textbook theory and allows a more complete strategic view of the corporation, its stakeholders and its environment, but in the absence of relevant experience it will be a limited academic exercise.

You be the judge.

Immune to the recession

At the recent Concordia MBA International Case Competition we had a presentation from Jet Aviation on their dilemma of whether or not to scale up their facilities to accommodate the interior design and build for a private Airbus A380 just purchased by Prince Al-Waheed of Saudi Arabia. He already has a private Boeing 747 and has decided to add another $300 million palace in the sky.


An interesting observation by executives during the presentation was that the "low end" private jet market was being affected by the financial downturn, but that the super rich were pretty much immune so far. The explanation was that aside from their continuing ability to afford these luxuries, their planning horizons at this level were also longer than the normal short-term period of an economic recession. Interesting.

Suggests we might all take a closer look at which customers or products are more or less vulnerable to these challenging times. Your Cadillacs and SUVs are in trouble, but maybe not the Bentleys and Ferraris?

Unfortunately the super rich market may be immune but it is not very large. The forecast market for private A380's is only about 8 - 10 over the next 15 years, with three potential competitors. And the other bad news is that the buyers tend to be tough negotiators, slow to pay and quick to sue!

High risk and huge investment. Not much attraction there for most of us.

Elvis is No. 1

Here is an inspiring fact about Elvis. Among dead celebrities he is still number one in annual income. More then thirty years after his death in 1976, he is still earning in excess of $50 million a year! (OK, he's not earning it, his heirs and successors are.)

An impressive example of building a business model that ensures recurring income long after the initial work is delivered. It works for recording artists, authors and others that receive continuing royalties or sell continuity programs, memberships, subscriptions. Some of the highest earning consultants, advisors and coaches are the ones that are smart enough to sell their services with a percentage override on future sales revenue or cost savings.

Is there an opportunity that you're missing in your business? After selling the product or service are you selling the add-on warranty support or technical service?

Wouldn't your kids be pleased to know they'll still be getting cheques from you long after you're gone?

Summer doldrums

Quietly drifting in no particular direction. That's what the doldrums mean to me, based on vague memories from high school history classes of the great explorers in their sailing ships . (Confirmed by Wikipedia it's apparently an area near the equator, famously described in the "Rime of the Ancient Marine" by Samuel Taylor Coleridge.)

For business it often means a quiet period too. Everyone is enjoying their family holidays or summer recreation activities rather than starting new business activities.

But it can also be an opportunity to spend more time building stronger client relationships because there is less pressure and conversations can be more relaxed and informal. It may be a good time to reflect, plan and strategize with key customers before the hectic season of "back to school" arrives. Trying to fit in some social contact with customers during the summer doldrums may help you be more successful during the winter flurries of activity that follow.

Looking back and planning ahead

The start of a new year is a good time to look back and plan ahead. (Sounds dangerous. May explain the pain in my neck.)

However, looking back at 2007 can you conclude on the mistakes you would rather not repeat or the things you would like to do more often? Or maybe the issues and ideas that were completetly neglected? Select your priorities and include them in your plan for 2008.

Is it time for a radical new strategy or simply continuous improvement of a well established formula for success. Don't forget to look outside your business at your personal priorities. Is it time to fix the foundations of family, friends, physical and financial health?

And don't try to do too much. Small successes will usually add up to more than a few big ideas that don't get finished. Good luck.

An impressive CEO

At a recent McGill alumni breakfast, the guest was Darren Entwhistle, President and CEO of Telus, Canada's newest national telecommunications provider.

A very articulate and focused leader, Entwhistle clearly communicates where he wants to go and his process for getting there. Still "frustrated and bitter" about the federal government's inability to get out of the way for his bid to acquire Bell Canada, he thinks we are handicapping Canadian telecom's from growing into world class competitors. A familiar refrain also from the banking sector and other industries frustrated by regional and provincial barriers.

Entwhistle also described the challenges of ignoring the financial critics and market watchers to stay focused on the internally sound corporate strategy. Short term share prices and industry fads will sway those outside opinions, but a well developed sound strategy will succeed over the long term.

An impressive CEO, Entwhistle obviously inspires confidence in his leadership for the management team, employees and shareholders of Telus. (And he's another McGill MBA - Class of '88.)

Essence of entrepreneurship

I had lunch yesterday with a client and friend who represents for me the essence of entrepreneurship. (He is too modest and discrete for me to mention his name here.)

In my opinion, the essence is to combine the strength of a marketable expertise with the ability to think and act strategically. In his case, he has a very high level of knowledge and experience in the design, build and maintenance of computer data centres. He initally worked for another a specialist in that field then left to start his own business. Over time he successfully positioned his company as the recommended service centre for the industry's leading manufacturer; grew to a size that exceeded his own management abilities; introduced a new partner and executive management team; accepted a new role in the company that leveraged his unique expertise and skills in developing customer relationships; and managed to re-position the company as a major project contractor to design and build large computer room installations from its origins selling and servicing basic hardware.

Many entrepreneurs I work with are equally competent and dedicated to their area of technical expertise but much less capable of managing their business strategically. Others may have the education and experience to manage and think strategically but have little to offer in unique expertise.

Success flows more easily for those that have both.