Being an entrepreneur isn’t easy. Most people end up failing at it. The reason that so many people fail isn’t necessarily because their idea was bad, they fail because they didn’t avoid the many traps that entrepreneurs face. If you want to succeed not just at starting a company but also at running a company whose success can be sustained, you need to be on the lookout for these pitfalls.
The Money Trap
There are many great entrepreneurs who never got the funding for their idea. There are also many companies started by entrepreneurs that were hurt not by a lack of money, but by an abundance of it. This trap is simple yet too many companies fall into it. When the company gets its first round of financing everyone is happy and in a celebratory mood. Entrepreneurs start spending money to spruce up the office. Suddenly the company has a chef, has an artist painting murals on the walls, and is hiring highly talented people at exorbitant salaries. Your first round of financing should be for small and smart investments. Do not end up spending and investing so much that you cannot sustain the business when the funding runs out.
The Innovation Trap
The innovation trap is when the entrepreneur is so convinced that their idea is innovative that they start ignoring signs of danger. It might seem stupid but this has happened in a lot of companies. Whole companies were shutdown and when the employees were interviewed they all say that they saw the end coming. The entrepreneur is so focused on their idea and its innovation that they think it cannot fail. Giving pitches after pitches makes them believe too much in their own words and it can be their own downfall.
The Entrepreneur Trap
Entrepreneurs have almost become legendary figures in the world of business. New entrepreneurs think they are great as well. This isn’t wrong; you need to have some ego and pride in order to compete in the world of business. The problem is that they begin thinking that they are the only people who know how the business should be run. We read all the time about successful entrepreneurs like Elon Musk, Richard Branson, and many more. What we do not read about are the hundreds of people these entrepreneurs trust to vet their idea. These people only take decisions on the basis of business intelligence. You need to do the same.
The Small Innovation Trap
The most common type of innovation is a small modification in an existing product. The only problem is that if you try to base your business around a small innovation it is very easy for bigger companies to eat you up. If you think up an idea for a toothbrush that is better than the ones being created right now, you need to come out swinging. If you start as a small company you will not be able to compete with the billion dollar behemoths in the dental care industry. They will simply change their products to be similar to yours and win. Another big reason is their low cost. Due to marginal costing the more product you make, the lesser it costs per product. The billion dollar companies will be making toothbrushes at such a low rate that they will be able to price you out.
There are many other things you need to look out for. Being a successful entrepreneur means that you need to be able to see where things are headed. You need to be realistic with your vision and choose a path that is actually viable.