Entrepreneurship is like a hard mountain climbing. You need to know how to get down from the mountain when the storm hits and keep your business in the game for the long term. To come back in one piece is one of the most important things in climbing. When you’re close to the summit you have the impression that you have the victory in your pocket, becoming distracted just when you need to be focused to the maximum. I was told that when you climb is good to have in your backpack some “fear”. Not that irrational fear, but the fear that awakens all your senses and keeps you plugged in constantly. Sometimes, distancing yourself and watching from the height of an eagle is giving yourself a chance to avoid entrepreneurs’ top blunders.
When you are embarking on a new venture and particularly when it comes time to secure financing, there are several predictable pitfalls that entrepreneurs can learn to avoid:
- Provoking mistrust in the investor
Difficulty executing the plan, be prone to excessive spending, half-hearted enthusiasm for sales and lacking negotiation skills will scare investors.
- Small is important. Starting too big is, sometimes, a recipe for disaster. Manageable, measured, improved, and then grown, a small startup will allow us to change course quickly and easily.
- Half-hearted dedication.
Demonstrating complete commitment to entrepreneur’s idea is vital to moving the endeavor forward. Project’s growth or profitability is hardly possible with a part-time commitment.
- Excessively high salaries and minimal capital injections.
With excessively high salaries getting the company off the ground will be a difficult task and will convey a sense of lack of confidence among investors. “A high salary and a low capital injection on the part of the entrepreneur is a very unappealing combination for the investor,” says Professor Fernánádez Terricabras from International Business School of Navarra.
- Keeping a finger in every pot.
Not letting go of control, excessive control, lack of power to delegate and missing the mark in defining each employee’s responsibilities is one of the ego traps which can be avoided and is completely in our control.
- It’s not enough to be the technical guru. Believing our technical skills trump our leadership skills will lead to a trap when the organization will grow.
- You don’t have your own devil’s advocate for healthy questioning and challenging the common thinking. Surrounding yourself with more of you can lead to stagnation and lack of innovation.
- You don’t exercise self-control and good judgment. As a leader in your expanding organization, we are always monitored, so you will be forced to put on a more professional face.
- You have limited self-control.
When asked to resist temptation (like a gourmet plate or a game), people tend to perform less effectively and less creative.
- Your inner batteries discharge too quickly.
You let yourself discourage to fast, you do not play enough, and can not see the situation objectively.
- A purely materialistic philosophy.
“I can honestly say that I have never gone into any business purely to make money. If that is the sole motive then I believe you are better off not doing it. A business has to be involving, it has to be fun, and it has to exercise your creative instincts,” says English business magnate, investor and Virgin Group’s founder Richard Branson.
- Loss detestation. Dealing with failure is something most entrepreneurs have to get used to.
The risk taking is one of the pillars of entrepreneurship. “Don’t let things get out of control”, you here from everywhere. But entrepreneurship involves a constant ambiguity, constant challenges, and, of course, loss aversion. Keep in mind that only eight per cent of startups are actually successful. If you are, inevitably, caught in a tsunami, take into account some back-up doors like an IVA (individual voluntary arrangements), a less severe option to exit from spiraling debts. The key is to get individual advice.
“It’s not that it doesn’t feel bad. It’s the worst thing. You’re sure that everyone can see that you’re a failure.. It was really tough, but then again, that’s what I do and that’s what entrepreneurs do. You will sometimes fail,” said Morten Lund, the Danish entrepreneur and Skype investor who shocked the media when he filed for bankruptcy in 2009 after making some less-than-perfect investment decisions.