One of my favorite quotes comes from legendary auto entrepreneur Henry Ford. As a business owner, I appreciate it because it captures what our mistakes and failures really are: Opportunities.
"Failure is only the opportunity to begin again, only this time more wisely."
While entrepreneurs spend a lot of effort trying to avoid failure, sometimes the lessons one learns from those missteps can be invaluable. I'm not saying business owners should actively pursue failures. But when they happen, you can come away wiser, stronger and ultimately more profitable.
Here are five common startup mistakes and the lessons you can hopefully learn from making them:
1. Chase every opportunity.
Chasing profits and building a long-term profit model are two different things. Entrepreneurs typically have an instinct for smelling opportunity, but that same killer instinct can quickly turn to weakness when it becomes a distraction from primary goals.
Setting boundaries for the type of work and clients you want is vital to achieving long-term success. Remember, saying "no" can be a best practice for successful startups.
2. Not increasing total customer value. It's almost always easier to sell to an existing customer base than to find a new one. So what are you doing to maximize this?
This doesn't mean you should stop your marketing efforts, but it does mean you should have a plan in place to increase your total customer value (TCV) -- the total amount each customer is potentially worth to you.
The real money in any business is on sales of supplemental products or services. But this means you need to create additional products, and have a strategy to sell them. Your goal is to turn prospects into customers and then customers into clients. But without increasing TCV, it won’t happen.
3. No exit strategy.
Having an exit strategy allows you to begin with the end in mind and demonstrates to potential investors that they're investing in a business model, not just a passionate entrepreneur with a dream.
Don't let your passion or optimism seduce you into thinking nothing could go wrong or that you won't need someone else to step in one day and run your company for you. Remember: Begin with the end in mind.
4. Failing to test assumptions.
One of the greatest experiences of being an entrepreneur is coming up with a big idea. But not all ideas are worth perusing.
Unfortunately, this is a reality many have faced only after draining their savings. Usually it takes an investment of only a few hundred dollars to test a product or service -- not thousands of dollars and countless sleepless nights.
Test all of your assumptions on paper first, know your costs, factor in the unexpected and then decide if it's even worth testing. Only after you've completed those steps should you consider moving forward with a new venture.
5. Burning out.
This is probably one you won't be able to avoid. Unless you've experienced burnout, you'll probably keep thinking you can handle everything.
If handled right, burning out can actually transform you into a superhero -- just a different one. You're just a person and there are only so many hours in a day. Determine which tasks are better handled by others, delegate or outsource those tasks and keep track of the results.