11 Common and Counterintuitive Business Mistakes

11 Common and Counterintuitive Business Mistakes

by David Gaudreault, Serial Entrepreneur, Online Marketer and Personal Branding Passionate

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Sometimes I feel like common mistakes are SO common they are becoming the standard. Entrepreneurs line up to fall into these traps and pay the big price for what could easily be avoided.

In this article, I briefly provide a list of 21 well-known and very common business mistakes that can usually be avoided with common sense or professional advice from your local business center.

Then, I made a selection of 11 business mistakes that are very common, but also counterintuitive! These business mistakes don’t get the media coverage they deserve, and chances are they will not be brought to you by your local advisor, so I decided to bring them up in details in this article.

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  1. 21 Well-Known Common Business Mistakes
  2. 11 Counterintuitive Common Business Mistakes Nobody Talks About
    1. Entrepreneurs Take Risks…so Do I!
    2. Fantastic, My Target Market is so Big, I Will Easily Get 1%…and Make My First Million Dollars!
    3. I’m Offering a Product so Good…People Will Definitely Pay for It!
    4. My Idea Is So Good…I Won’t Talk About It Otherwise Somebody Could Steal It!
    5. My idea is so Good…It Will Be a Piece of Cake to Raise Financing!
    6. We are Experts…No Need to Talk to Customers, We Already Know What They Need!
    7. I Invested X Dollars and Y Hours in My Business…My Business is Now Worth X+Y!
    8. I Made My First Significant Sale…I’m Ready to Conquer the Mass Market!
    9. I Moved to a Very Good Location…I Will Get More Clients, More Sales, and More Profits!
    10. I Just Got an E-Commerce Website…The world is mine and my profits will blow up!
    11. I’m a Hard Worker…My hard work can only ensure my success!
  3. Conclusion

Before we dive in into my “nobody-talks-about” selection, here are the 21 well-known common business mistakes for your consideration.

21 Well-Known Common Business Mistakes

21 Common Business Mistakes that can easily be avoided with common sense and professional advice. #businessmistakes #businessmistakestoavoid #commonbusinessmistakes #businessmistakesstartups #businessmistakesentrepreneurs

Photo by Manuel Meurisse on Unsplash (modified)

  1. Not choosing the right partners or doing all by yourself (one man show)
  2. Not hiring the right people (never hire newbies to save on salaries!)
  3. Not planning your business properly
  4. Not pricing your product properly
  5. Being too meticulous and waiting too much to put your products in the hand of customers
  6. Making legal mistakes like choosing the wrong business structures or not getting a patent for your invention
  7. Not investing enough in marketing
  8. Not focusing on sales (Sell, Sell, Sell!)
  9. Not understanding and properly managing cash flow (this is so common!!!)
  10. Delegating finance management (always keep an eye on your money!)
  11. Poor budgeting (overspending or underspending)
  12. Micromanaging (you need a global vision)
  13. Underestimate your financing needs
  14. Ignoring the competition
  15. Not building a project around your strengths and weaknesses
  16. Using vanity metrics to get yourself feel good (if you are growing because you triple the budget in marketing, but you have no organic growth; this is vanity metric.)
  17. Growing too quickly without the financial resources to back up your growth
  18. Not engaging enough with your customers
  19. Lack of focus (trying to do too many things, too many products, too many services. Focus on one thing and do it right!)
  20. Ignoring intellectual property
  21. Planning only for success (always make sure to be prepared for the storm)

These mistakes are common and most importantly they can be avoided with common sense or professional advice! So I won’t go into details for each one of them. However, understand me well, these mistakes are still VERY important and should be taken with equal attention and consideration. Each one of the above business mistakes could take you out of business!

My 11 business mistakes selection is different in a sense that these mistakes are very common but counterintuitive. They can hardly be avoided with common sense.

11 Counterintuitive Common Business Mistakes Nobody Talks About

This list of 11 Counterintuitive Business Mistakes can hardly be avoided with common sense and worst, no body talks about these mistakes! They are very common, but yet don't receive the media coverage they deserve. Just like successful entrepreneurs do, make sure to know about these common business mistakes and avoid them to ensure the success of your business! #businessmistakes #commonbusinessmistakes #businessmistakestoavoid #businessmistakesstartups #businessmistakesentrepreneurs

1. Entrepreneurs Take Risks…

so Do I!

Successful entrepreneurs try to avoid risks or at least take calculated risks. Entrepreneurship is not a lottery!

In business, if the odds are always against you, you will end up loosing! Calculate the risk to always keep the odds on your side. Click To Tweet

Successful entrepreneurs rely on their ability to observe, be in constant communication with customers, identify opportunities, test potential solutions, measure the response, gather and analyze data and build short, medium and long-term visions based on solid analysis.

Many people carry the false belief that successful entrepreneurs are risk takers because running a startup implies a high level of uncertainty. However, successful entrepreneurs use a constant build-measure-learn approach to constantly validate each and every one of their moves to increase their chances of success and decrease the uncertainties.

New entrepreneurs should understand the idea of risk management and take decisions that will limit the risk as much as possible.

2. Fantastic, My Target Market is so Big, I Will Easily Get 1%…

and Make My First Million Dollars!

You should always start with a niche or submarket and be able to get a big share of that niche. Big markets are served by well-established businesses and these companies are miles away ahead of you. They have better sales forces, distribution channels, lower costs, better supply chains, marketing power, etc., and they fight for every bit of their market including that tiny 1% you want to steal from them.

As an entrepreneur, if you think this way, you will sooner or later, become a member of the club of entrepreneurs who failed miserably trying to get a supposedly easy 1% from a big market.

3. I’m Offering a Product so Good…

People Will Definitely Pay for It!

Maybe, but maybe not, so you are better validating your assumption before investing money and energy in developing your product. In rare cases, people will pay more for a product or service when the improvement is significant (+10x), really meet the customers’ needs and do it in a better and most efficient way than existing products.

The smartphone is a good example, it completely blew off the industry as the innovation was indisputable and was really adding over 10x value.

In many cases, the improvement brought up by entrepreneurs is not in line with the real customer needs and won’t justify a higher price in the eye of the consumers. Many gizmos, gadgets-added products fall into this category as well as high-end and overly high-quality products.

To avoid this pitfall, follow a lean start-up approach and it will save you from a lot of potential troubles like ending up with 10 000 products in your garage that you can’t sell because nobody wants them. Here is a link to one of the best business book in the market, The Lean Start-Up by Eric Ries. If you haven’t read it, hurry up, this book is a must for any serious entrepreneurs!

Instead of adding features and quality to an existing product, a successful approach is sometimes the opposite. Many industry disruptions come from lower-end products that better serve the real needs of the customers. Large companies tend to work out of their existing products, but they will never cannibalize their existing market with lower-end and lower-priced innovations even when they know these innovations would better serve their clients.

It would negatively affect their revenues over the short and medium terms and really few CEOs have the courage to do it. For this reason, disruptive opportunities often arise from lower-end products that positively affect the life of customers.  This is called the innovator’s dilemma.

This concept is well explained in this book called The Innovator’s Dilemma by Clayton M. Christensen. By understanding this concept, you will put yourself in a better position to identify disruptive opportunities.

4. My Idea Is So Good…

I Won’t Talk About It Otherwise Somebody Could Steal It!

Steve Blank is a professor and a reference in the start-up community, he wrote the best seller books The Four Steps to the Epiphany and The Startup Owners Manual. I recommend both of them. Steve’s approach is based on the idea of customers’ discovery. He always says: “get out of the building and start talking to customers on day one to get early feedback on your idea”. He is so right!

You think you have a good idea and it might be true, but you need to get some validations from your future customers.

Customer’s discovery will not only help you validate your idea, it will also confirm if there are a need and demand for it. And chances are if a need exists it will not be completely in line with your initial idea, you will have to tweak it, many times, to really find the sweet spot where customers will really get excited about it. Excitement is usually a good sign that you are getting somewhere with your idea.

But then, you might say, if I talk about my idea, somebody may steal it.

One difference between a good entrepreneur and all the others is execution. Many people have good ideas, venture capital firms and angel investors get to see tens of ideas every day, but only good entrepreneurs are able to turn their ideas into a successful business.

This is very important:

The first step to turn an idea into a successful business is to get out of the building and talk about it to as many people as possible... and listen! Click To Tweet

That being said, if you discover the secret sauce to something big, obviously there are some precautions you can take, getting a patent or a trademark, acquiring a domain name, etc., are some minimal precautions, especially if you plan on meeting an industry giant the next day or going live on Shark Tank! I recommend you go meet your local business resources for advice. Look for a collaborative workspace, a tech incubator or accelerator. They are usually good people to advise you.

5. My idea is so Good…

It Will Be a Piece of Cake to Raise Financing!

No! It is never easy to raise financing and investors don’t invest in ideas. Investors invest in:

  • A business founded by remarkable people
  • A business concept that is new and innovative
  • A business with proof of concept
  • A business with sales
  • A business with momentum
  • A business with a good plan
  • A business with major growth potential

It is not one or the other, they look for the entire package in one single business! You can have the best idea in the world, if you can’t demonstrate that you have the above elements, you might get a loan or love money, but not a penny from a serious investor.

An idea is of no value to an investor unless you make the demonstration that YOU and your team can turn it into a viable, profitable and high growth potential business. If you step up in front of an investor with the elements mentioned in #5 in hands, not only will you have a good chance to get financing, but you will also put yourself in a good position for a negotiation, so you won’t have to give away a big chunk of your business.

6. We are Experts…

No Need to Talk to Customers, We Already Know What They Need!

This is an old approach that tends to disappear thanks to Steve Blank and Eric Ries and their Lean Startup revolution. We used to see it a lot, experts cloistered in their lab, doctors, engineers, developers working on a secret project for years to finally launch the perfect product that nobody wants.

It is one thing to be an expert, but it is another to have a crystal ball to know what customers really want and what they are willing to pay for. There is only one way to know what the customer really wants, needs, purchases and at what price, it is with customer discovery.

By constantly talking to your target audience from day one and test your solutions as you develop and on a regular basis.

By bringing the developers and the engineers in front of the customers to force face to face conversations. This is the only way one can develop a product that is in line with the real customer needs, a product that customers will be willing to pay for.

Even better, get some commitments from your customers right from the start, a letter of intends or an order! A popular way of doing it is through crowdfunding where customers purchase a product before it is actually developed and manufactured. It validates that you are developing a product that customers want and are willing to pay for.

7. I Invested X Dollars and Y Hours in My Business…

My Business is Now Worth X+Y!

So many inexperienced entrepreneurs make this mistake. The value of a business has nothing to do with the amount of money and time you invest in your project. Two people may invest the same amount of money and time in their startup and the first one will generate a million dollars in annual revenue and the other will still be figuring out the next pivot to get a few potential customers excited

8 Elements Investors Consider in the Evaluation of your Business:

List of 8 elements that investors take into consideration in the evaluation of your startup. 8 make-or-break factors that make the difference between the successful financing of your startup and a polite refusal. #investorsstartups #investorsbusiness #businessfinancing #startupfinancing #startupevaluationcriteria
  • The value of the founders (the team)
  • The business idea. Is it new and innovative?
  • The proof of concept. Do you have a minimum viable product or a ready to market products?
  • The sales & margins. Did you make sales? Did you make attractive profit margins?
  • The momentum. Is your company showing clear metrics of growth?
  • The plan. What is your plan for the next 1 years, 3 years, 5 years and 10 years?
  • The growth potential. Is the market of sufficient size to ensure a good return on investment?
  • And the exit plan. How the VC firm or angel investor will be able to cash in, in 5 years from now

8. I Made My First Significant Sale…

I’m Ready to Conquer the Mass Market!

Differentiating early adopters and mass consumers is essential and being able to reach the mass consumers after getting some traction with early adopters is a critical milestone and a real challenge.

The adoption of new products evolve throughout the course of the life cycle of the product and is composed of five distinct types of adopters.

5 Distinct Types of Innovation Adopters

  1. Innovators (2.5%),
  2. Early adopters (13.5%),
  3. Early majority (34%),
  4. The late majority (34%) and
  5. The laggards (16%).

Reference: Diffusion of innovations by Everett Rogers

Each type of consumers has their particularities. For example, innovators are usually risk-takers, knowledgeable about your product, are excited by the possibilities of your new ideas and they can generally afford to pay the extra to get your product at an early stage.

Early adopters are the most influential people in the market, are somewhat risk takers and they have enough leadership to make their own decision. They won’t wait for the majority to adopt a product before jumping in!

The majority (early and late) are not risk averse, they tend to be skeptical, they have more limited financial resources and tend to spend their money wisely. They will usually wait to get some recommendations from early adopters and build their opinion on others’ experiences.

Finally, the laggards are last in line and their arrival is usually not a good sign as it is announcing a decline in the product sale cycle.

Being aware of these adoption phases is essential to target to the right audience in your marketing strategy and build the value around your product. Timely speaking, if you approach the majority before launching the product you are clearly wasting precious marketing dollars. That is to say, if you use one single approach and apply it to all phases, you will fail miserably to carry your product to the mass market.

Even though you made your first significant sales it doesn’t mean you are ready to attack the mass market, maybe you are currently selling to the 2.5% innovator group and have yet to reach the early adopters! This means you are still far from reaching the mass market stage and need to adjust your marketing accordingly.

It’s one thing to sell a high tech and expensive console to the most fanatic Gamers in town, it’s another challenge to sell the same console in every household in the country.

Many businesses never manage to reach the mass market although they make a few hundred thousand, even a few millions in sales.

9. I Moved to a Very Good Location…

I Will Get More Clients, More Sales, and More Profits!

A highly coveted location never guarantees success, but always comes with higher expenses and inconveniences! Higher taxes, higher rental fees, higher parking fees, limited space, restrictive municipal rules, and so on. You can be on the main street of a major city with hundreds of people passing by your store every minute if your products and services are not appealing to customers, are of no interest, you won’t have more customers coming in.

The problem with a highly coveted physical location is that it comes with a heavy engagement, most often a 5-year lease and owners often require your personal commitment, meaning you, as a person, has the obligation to pay the lease even after the bankruptcy of your company. It means this decision could lead to your personal bankruptcy or too many years of struggle.

So better prove your concept in a low-cost location before signing a 5 years commercial lease because that one decision could be the beginning of the end for your start-up.

10. I Just Got an E-Commerce Website…

The world is mine and my profits will blow up!

At first, a website is like being alone in the middle of the ocean with a sign: “Snacks for fishermen”. If nobody knows you exist, nobody will ever find you. Depending on the type of products and services and the level of competition in your market, it will take months if not years of implementation, integration, and optimization before you see a dollar of profits.

Consider your website as a new selling location with the prominent benefits of being accessible from anywhere, but if you sell in a well-served market you face equally tough competition as any other locations and you need to invest marketing dollars and blood, sweat and tears to stand out among the competitors.

Your well-established competitors invest massively in traffic generation, sales funnels, content- and paid- marketing, SEO and so on and they benefit from one advantage that only time and continuous efforts offer: organic traffic.

Organically generated revenues can be used to finance paid-marketing and increase your competitiveness, but you lack this advantage at the beginning. It is, therefore, more likely that your website will be an expense for a long time, before becoming a new source of profits for your company.

11. I’m a Hard Worker…

My hard work can only ensure my success!!

No, hard work will never outweigh bad business ideas or impenetrable barriers to entry.

In fact, smart work is much more valuable than hard work. You can work all week building an advertising campaign for your product, if you address the wrong people with the wrong message and with a product nobody wants, your hard work will not change anything to it.

If however, you publish the right message to the right target audience and offer a product your customers really need, it may take an hour of work and the return will be substantial.

That said, being smart in business does not mean being more intelligent than others. It means knowing how to validate each one of your assumptions.

Do not take anything for granted! You think of implementing a new functionality to your product? Build the lightest possible version of that functionality, give it to your customers, measure their interest and learn from their behavior.

It can be a dead link leading to a “functionality coming soon” page, it doesn’t matter. You build, measure the response and learn.

Is the percentage of customers clicking that new link high enough to justify an implementation? If you see a real interest, build the functionality, otherwise test another functionality until you find some excitement from your customers.

The same applies to every aspect of your business! From the idea stage to the development, to the launch of your product.

Conclusion

As you can see, these 11 business mistakes are very common and important, but they tend to be more furtive because they are counterintuitive.

  1. We all agree that entrepreneurs take risks, but very few realize that entrepreneurs limit the risk by taking calculated risks.
  2. We all agree that it seems very easy to get a tiny 1% of a big market, but this tiny 1% represents 100% of one competitor’s market and he will fight for that 1%.
  3. We all agree that people should pay more for a good product, but the reality is that people won’t pay if they don’t need it.
  4. We all agree that keeping your idea secret is the best way to keep thefts away, but it is the worst way to turn it into a business.
  5. We all agree that better the idea the easiest it will be to raise financing. However, investors don’t invest in ideas.
  6. We all agree that experts should know what the customers needs and wants, but in reality, only the customers know what they want and what they are willing to pay for.
  7. We all agree that a fair way to evaluate a business would be to add up what the founder invested in the company in terms of time and money. However, successes and flops often require the same amount of investment, but present very different results!
  8. We all agree that making a first significant sales is exciting, but understanding the life cycle of a product makes us understand that selling to early adopters does not guarantee a mass market success.
  9. We all agree that moving to a high traffic location should be beneficial, but if nobody is interested in your business, your products, and services, the good location will quickly become a burden.
  10. We all agree that having an e-commerce website should increase your sales, but the expenses related to the site can eat up your profits for a very long time.
  11. Finally, we all agree that hard work should give results because we tend to imagine manual workers. However, in business, smart work gives much more results than hard work!

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Who is David Gaudreault?

David Gaudreault Bio - David's Way

I'm an entrepreneur, a maker, an online marketer...and Personal branding passionate.

I help entrepreneurs develop two essentials for building a successful startup: (1) building a strong personal brand and (2) building solid foundations of passive incomes to gain professional freedom.

I also help entrepreneurs find their big ideas, execute them right, impact millions with their businesses, and change the world.

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