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What Not to Do

A seasoned entrepreneur reveals the 17 most common mistakes startups make and how to avoid them -- plus, the 5 things you must do to ensure success.
February 1, 2004
URL: http://www.entrepreneur.com/article/66454

John Osher has developed hundreds of consumer products, including an electric toothbrush that became America's best-selling toothbrush in just 15 months. He also started several successful companies, including Cap Toys. He built sales to $125 million per year and then sold the company to Hasbro Inc. in 1997. But his most lasting contribution to the business world just may be a list of screw-ups he jotted on the back of a piece of paper.

"After I sold my business to Hasbro, I decided I'd make a list of everything I'd done wrong and [had] seen other entrepreneurs do wrong," explains the 57-year-old Jupiter, Florida, serial entrepreneur. "I wanted to make a company that didn't make any of these mistakes. I wanted to see if I could come up with the perfect company."

He came up with an informal list of "16 Mistakes Start-Ups Make"-since expanded to 17-that has been used in a Harvard Business School case study, has been cited in many publications, and has become a part of what he teaches budding entrepreneurs in his frequent university lectures. He also used the list in 1999 when he started Dr. John's SpinBrush to sell a $5 electric toothbrush that quickly became America's best-selling toothbrush. In 2001, Procter & Gamble purchased the company from him for $475 million.

"I didn't expect it to actually work like that, but it did," Osher says. "It'll probably never happen again. But we made a perfect business, from the beginning to selling it to another company." Since then, however, Osher has created another product, an electric dish scrubber that he also sold to Procter & Gamble. And he has yet another health-and-beauty product-development effort underway-although he's keeping the details close to the vest-in which he'll try again to create the perfect business.

To home in on what lies behind the 17 mistakes, Osher told Entrepreneur what they are and how you can learn from them to achieve your own level of perfection.

Mistakes 4 through 14

Mistakes 15 through 17

Simultaneously, I will keep the option open to sell it in case I can't get something more proprietary. That means I won't sign international agreements that would kill any opportunity to sell it to a multinational. I will make sure that the patent work is done properly. And I'll try to make sure manufacturing is up to the standards of any multinational company that I might try to sell it to.

Another exit strategy can be to hand the company to [your] kids someday. The most important thing to do is to build a company with value and profits so you have all the options: Keep the company, sell the company, go public, raise private money [and so on]. A business can be a product, too."

5 Tips to Get You on the Right Track
Is there any difference between doing nothing wrong and doing everything right? Peter Russo, director of Boston University's Entrepreneurial Management Institute, says that while you're avoiding John Osher's 17 mistakes, you should also try to do five key things right. "If you do those five things, you're probably not going to make those other mistakes," he says. Here are Russo's five things start-ups should do:

1. Know your goals for the venture. "A lot of people see an opportunity without ever asking themselves what they're doing it for," says Russo. "Are they trying to make a quick buck? Create a legacy? Have a lifestyle? There are a lot of reasons. It's critical that you know from the beginning what your goals are, because everything else is going to revolve around that."

2. Recruit and hire the best people. "It sounds almost cliché now to say I'd rather have an A team with a B idea than a B team with an A idea. The right team can fix a lot of problems. If you don't have the right team, you don't have much of a chance," Russo says. "Get the best people available at the time."

3. Develop a forgiving strategy. "Things are going to go wrong," he says. "They're going to be harder, take longer and cost more money than you think. You have to have a strategy to survive. A lot of people put together a plan that will work only if everything goes right. It's not going to."

4. Be honest with yourself. "Recognize shortcomings, weaknesses and problems immediately. Do not ignore them or try to talk yourself out of them," Russo says. "Address them head-on."

5. Commit to the business. "You can't really do anything significant without fully committing yourself to it. A lot of people try to dabble," he explains. "They think they'll do it part time [and] see how it works out. If you plan to be successful, you have to commit."


Mark Henricks writes on business and technology for leading publications and is author of Not Just a Living.