During my time as a Dragon on BBC’s Dragons’ Den, I’ve had the opportunity to talk to well over 300 startup businesses across three series. After interacting with so many entrepreneurs, you get a good sense of what people generally get right and wrong in the world of business. Today, I thought it would be helpful to outline five common mistakes I see first-time founders make with their startups time and time again. All of these mistakes are avoidable. After reading this article, you’ll have no excuse for falling into any of these business traps again!
1. Sticking to an Unsustainable Business Plan.
A big mistake I often come across is the entrepreneur that refuses to budge from a business plan that just isn’t working. If an entrepreneur is particularly inflexible with their plan and not paying attention to the feedback from consumers, they risk losing money and potentially flatlining the business.
2. Taking Consumer Feedback personally.
It’s completely understandable to be attached to your product, especially if you’ve built your business from scratch. With this being said, it’s important to understand that consumer feedback is never a personal attack and can often drastically improve your product. I’ve noticed in the den several entrepreneurs being overly defensive, refusing to accept constructive criticism, and sadly missing out on potential investment.
3. Giving Up Too Much Equity in Their Business.
My fellow Dragons and I see this particular mistake a lot with new entrepreneurs. They’ve accepted many rounds of investment from multiple investors, which results in them having very little equity in their business. By the time these businesses get to the Den, there’s not enough equity left to make a meaningful investment and contribution. Never take more money than you need and be smart about who you let invest and the ownership of your company.
4. Taking Advice from the Wrong People.
Advice from an expert can be vital to the growth of a new startup. Industry experts give you the cold, hard truth on your business. Family and friends, on the other hand, are often scared to do so. They feel obliged to abide by a ‘compliments-only policy’, which leads to false excitement about your product or business. While it may seem difficult and daunting to reach out to people in the industry, it really can be as simple as adding a connection on LinkedIn or sending an email. In my experience, lots of successful business people are happy to help new entrepreneurs. After all, if you don’t ask, you don’t get!
5. Not Maximising Their Resources.
For new businesses, it can often feel like you are fighting against the clock to turn profit while using as little resources as possible. This can easily lead to burnout and leave the company high and dry. I would recommend that entrepreneurs move a little slower and utilise every possible resource they have. This could mean using the contacts of your contacts, for example. Take advantage of who you know, because you never know where a connection could take you.
These 5 common mistakes can easily trip entrepreneurs up, and can be fatal to growing a business. Keep going, don’t give up, and, most importantly, don’t fall for any of these 5 founder mistakes!