Article by Stephanie Thoo.
As we’re kicking off the Startup Gippsland program, I’ve been reflecting with the team on what the most important lessons should be for Gippsland’s next generation of entrepreneurs.
In the last 12 months I have been lucky enough to coach over 200 entrepreneurs in my prior role running startup programs RMIT, and I’ve seen almost every one of them make the same three mistakes, no matter what their capability, background or industry. So what are these three mistakes?
- Losing focus
Losing focus is the #1 thing that I’ve seen inhibit entrepreneurs. Often this happens when they hit a roadblock and instead of tackling it head on, they distract themselves with something more engaging or easier. I liken this to Magpie Syndrome where shiny (i.e. exciting or more fun) activities pop up and distract the entrepreneur from other work that is more difficult but more high-value. For example, I once coached an amazing entrepreneur who was building an adventure sports app. He became stuck when trying to develop his marketing strategy for his app that was 90% built, but instead of tackling it head on, he distracted himself by writing an entire business plan for another idea that he had. Now this is an extreme example, but I’ve seen it occur in many different shapes and forms. One tip to stay focused is to get an ‘accountability buddy’. This can be a fellow entrepreneur, family member or mentor – anyone who you can regularly check in with who will honestly call out any magpie behaviour when they see it.
- Not thinking lean
The lean mindset has taken the world by storm, however when you’re head down in starting your business, it can be easy to overspend in terms of time, money and energy. Where entrepreneurs typically forget to be lean is in building their product or service. If you put yourself in an entrepreneur’s shoes, you can understand why they might overspend – they’ve spent years thinking about having their own business and now that they’ve finally taken the plunge, they don’t want their product/service to be anything less than perfect. The mistake in this is that these products/services are often being built away from the customers’ eyes. The entrepreneur is not getting customer feedback early in the process which can cause costly rework down the line. Reid Hoffman, founder of LinkedIn, famously quoted “If you aren’t embarrassed by the first version of your product, you shipped too late.” This quote really summarises the lean mindset for entrepreneurs – spend the minimum amount of time, money and effort required to put something workable (yet embarrassing) in front of your customers so that you can get their feedback as fast as you can. One tip to keep this lean thinking top of mind is to ask yourself 3 questions every time you go to make a decision about your product/service – Can it be done quicker? Can it be done cheaper? Can it be done with less effort?
- Measuring intent, not behaviour
In a similar vein to lean thinking, intent vs behaviour relates to how entrepreneurs tend to test their idea with their customers. The most common way that entrepreneurs tend to test their idea is through customer interviews or surveys, asking questions such as ‘Would you buy this product or service?’ or ‘How much would you pay for it?’. Although well-meaning, these questions can be useless, if not harmful, for the entrepreneurs decision-making. This is because they are measuring customer intention, not whether these customers actually use or buy their product/service (i.e. behaviour). Researchers have long been measuring this intention-behaviour gap and have shown that intention matches behaviour only 30% of the time (this means when I say I’m going to go to the gym, I’ll only actually go 30% of the time). This is particularly dangerous as an early stage entrepreneur because you’re basing your investment decisions on flawed data. Our tip: conduct customer tests that require the customer to commit, act or carry out some kind of action (i.e. behaviour) of support for your product/service. For example, create a simple landing page (single page website) for your business, drive people to the page using a few paid Facebook ads, and see how many of these people click your ‘pre-order now’ button.
If you, or anyone you know, have a business or business idea that wants to sell to national or international markets, then visit us at startupgippsland.com.au to find out how we can help you avoid these mistakes and succeed.
Stephanie Thoo is one of the facilitators of the Startup Gippsland program, and formerly ran entrepreneurship programs at RMIT.