If you’re in the process of starting your own business, you should be interested in all of the ways your company can fail. That might sound odd, but it actually makes sense. If you know how you can fail, you know what you need to do to avoid failure. That’s why, when you write your business plan, you need to look at the competition, the market, and all of the potential exit strategies you might need. In addition to mapping out how to avoid failure for your business, you can learn about others’ mistakes so that you can avoid them and find success without quite as many challenges.
With that in mind, here are some of the worst mistakes that otherwise savvy entrepreneurs have made that will almost always kill a startup.
FALLING IN LOVE WITH YOUR IDEA
You may be passionate about your idea, and you may think it’s the best thing to hit your industry in the last 100 years. That enthusiasm is great, and it’ll help you sell a lot of products…if there’s a market for what you’re selling.
All too often, entrepreneurs come up with great ideas for products and services that they’d love to see come to market and that they just know will be a huge success. Then they see the market research, and it turns out there’s really not much of a demand for what they’re selling, at least not in their niche, at their price point, etc. Instead of pivoting and evolving or letting go of an idea until the market is ripe for it, they’ll continue pushing ahead. And they eventually find out that their perseverance won’t create a market for their product. That’s what happens when you fall in love with an idea, so always remember to keep an objective perspective as you test the waters for your business.
CHOOSING A TINY NICHE TO AVOID COMPETITION
A lot of new entrepreneurs look for niche markets where there’s no competition. To do this, they have to get really, really specific, which blocks out a lot of competitors but also a lot of customers. Understand that if you have a great idea and there’s a market need for it then you’re going to have competitors. If there aren’t any competitors when you formulate the idea, you will likely have some by the time you launch or shortly thereafter.
Furthermore, if your niche is too small, there’s no room for growth. You’ll sell your product or service to everyone in your market, and then you’ll have nowhere to go. Think bigger, and then look at how you can differentiate yourself from the competition.
IMITATING SOMEONE ELSE’S IDEA
Some people say that there are no new ideas, and that’s at least somewhat true. Every product and service around today is built on something that came before, and that’s okay. However, you don’t want to start your business based on a copycat idea. If you have an innovation on an old idea, that’s great. If you have a cool add-on that will make another product or service better, you’re on the right track.
But if you’re just trying to sell someone else’s idea dressed up as your own, you’re going to run into trouble. Investors will see right through it, and you may even run into legal problems if your design is too close to the original.
If you avoid these three mistakes, you’ll be on your way to starting a great business with a solid market need. Be objective. Think big. And don’t be an imitator. Good luck!