I would temper #1 a bit and suggest that the business plan and prototyping should emerge simultaneously. Thinking through marketing strategy helps you better define your product - what need are you meeting, whose you audience, etc. And can help you have better discussions as you float your idea. While prototyping and holding discussions (#2) helps to refine the idea, determine operational needs, etc. I see them as iterative versus linear processes. It took me months to get to my "business plan V1" but I was growing my network and experimenting at the same time. Notice I said version because being in business is also an iterative process. My products and services continue to evolve. I've made two major revisions and several minor revisions to my business plan over the past 20 months of being in business. I suspect that this will be the norm in this rapidly changing business environment.
When you first start working on your business, you probably dream of launching something amazing: After months of hard work, you’ll reveal a flawlessly executed site that users will flock to, love, and rave about.
So, it’s natural to want to put your head down until you churn out this perfect product. But ironically, that can prevent your start-up from reaching its full potential. It’s the opposite approach—launching something imperfect, getting plenty of feedback, and going through quite a few rounds of trial and error—that will ensure that your company is set up for success.
With that in mind, here are three common mistakes that new entrepreneurs make—and how you can fight against them.
Mistake #1: Starting With the Business Plan
Fix: Start With the Prototype
Now, don’t get me wrong—you should absolutely evaluate the business potential of your idea, but you’re wasting your time if you start by drafting a 20-page plan. Instead, do your research on the market and run the numbers on your monetization until you feel confident that the potential is there; then outline the simplest way that you can find out if your future product is something that people will actually use. Without a product that people like, a business plan is pretty useless.
For the first version of InstaEDU, all we did was connect a student and a tutor over video chat. There were no profiles, no collaboration tools, and no ways to schedule lessons. Students and tutors would literally hold pieces of paper up to their webcams to show their work. But a small number of students used it, got value out of, and gave us feedback on how we could better suit their needs. And this provided important insight into how to prioritize the hundreds of features we wanted to add and brought up lots of things we hadn’t thought of.
While our core thesis is still very similar to when we started, our product and business have evolved in many ways that we never could have never anticipated at the start.
Mistake #2: Keeping Your Idea Under Wraps
Fix: Talk About Your Idea to Anyone Who Will Listen
You have a billion dollar idea; you should keep quiet so no one steals it, right? While there are a few rare exceptions (e.g., you’re trying to secure a patent), you should be eager to talk about what you want to do to anyone and everyone in the earliest stages of a start-up.
Why? As you go through the exercises of finding the problem you want to solve, strategizing around the solution, and figuring out where to start, soliciting feedback from others—entrepreneurs and non-entrepreneurs alike—is extremely helpful. Discussing your start-up with others will give you greater insight into where there are holes, what does (or doesn’t) resonate with people, and the strategies you could utilize as you’re getting started.
When we first started working on InstaEDU, I spent weeks arranging as many meetings as I could to talk about the idea. These not only helped us work through some of the early kinks, but they also set us up well for great introductions to investors and potential candidates when the time came. Trust me, the value you get out of being open far surpasses any risk of competition.
Mistake #3: Assuming Customers Will Just Come
Fix: Be Ready to Work for Your First Customers
You started your company because you strongly believe that it’s something people want, so it’s easy to assume that customers will flock to it the moment you launch. Unfortunately, there are thousands of products out there fighting for the attention of your target customers, and not everyone will discover your product or be ready try it immediately. Sure, a start-up will occasionally take off on word of mouth alone (think Google), but most great companies take some time to find their audience (e.g., Airbnb, which was founded in 2007, but has only become a household name within the last couple years).
So, if you release your product and it doesn’t blow up overnight, don’t be discouraged. It can take months (or even years, in some cases) to find the best way to reach and attract your audience. We spent the first months after InstaEDU launched experimenting with marketing strategies, and some that we assumed would work completely flopped, but others that we hadn’t counted on were much more effective than expected. Be ready to be creative, experiment, and learn—and factor that into your plans. The first customers are almost always the hardest to find.
Tell us! What other mistakes do new entrepreneurs make—and how can they be avoided?