The Biggest, and Most Avoidable, Mistake of New Entrepreneurs
No matter who you are, what industry you’re in or what type of company you’re launching, starting a business is nerve-wracking.
The economic issues that the world has faced since 2008 have served as a deterrent for many who would have otherwise started a business, but even those who have taken the plunge face a lot of challenges -- as well as the potential for big mistakes.
While some might disagree, I believe that the biggest mistake most new entrepreneurs make when they start a business is the failure to test, test and test some more.
Some entrepreneurs aren’t sure how to test their ideas and processes. Others are afraid of the expense and the time commitment. Still, others don’t see the importance of testing. These individuals half-heartedly try to get enough data to secure their next round of funding. Each of these issues are problematically individually, but fall into several of these testing traps, making it much more difficult to become successful.
How to test ideas and processes.
The simplest, most effective way to test ideas and processes is A/B split testing. We do a lot of this at When I Work, the startup I work for. In an effort to boost conversions, we literally A/B test everything. A/B testing involves creating two versions of a web page, releasing both of them, and tracking the results of each one. I’ve talked at length about how to A/B test your business website, both during and after design and launch, so I won’t rehash all of that information here.
However, there’s more to test than your business website alone. It’s just as important to test your product ideas against the market before you launch your company (and before you even think about trying to secure funding). This involves some combination of data gathering, market research, customer surveys and in-person interviews of prospective customers to make sure your proposed solution is really solving a problem in the market.
You can also use A/B testing to measure product-market fit. Say you have an idea for an software-as-a-service product, but you aren’t sure which specific features will appeal most to your audience. Launch a website comprised of two landing pages, each of which describes a different feature and benefits set and includes a lead-generation form visitors can complete to demonstrate their interest.
Send traffic to the site via Adwords, Facebook Ads or some other pay-per-click service and watch your response rate. The results of your test will show you whether product-market fit exists, as well as which elements need to make it into your final product and the marketing collateral you create around it.
Finally, don’t think you’re limited to testing your web presence alone. Use A/B split testing and other testing protocols to test whether your internal processes are as efficient and as accurate as they can be. From customer service to leadership, try different processes and record your results. Doing so will save you a lot of time and result in greater overall team satisfaction.
The expense of testing.
Speaking of savings, many first-time entrepreneurs mistakenly think that testing is a waste of time and money. They want to get out there and start making money, data be damned. Well, let me tell you, nothing is more a waste of time and money than failing in business. If you don’t test your business assumptions, you’re likely to become one of the 50 percent of businesses that shut their doors within five years.
One of the benefits of testing is that it shows you the ways you can both maximize your profits and save money on expenses. When you’ve identified the exact right product or service for the market -- and the exact right sales copy for them to read -- you’ll find that your growth more than justifies the expenses involved in testing.
Imagine that, instead of implementing a thorough testing initiative at your company’s inception, you simply decide to launch your product and run with it. Because you don’t know exactly what your customers are looking for, you flounder for a while, making aimless changes in a seemingly fruitless attempt to guess what your customers are looking for. You may eventually hit on a winning combination out of sheer luck, but contrast your experience with someone who’s tested everything from product-market fit to sales copy ahead of time.
The business that’s going to come out on top is the one that knows the most about its market and is able to use that data in a strategic way. Testing may be costly and time-intensive at first, but it’s nothing compared to the losses you’ll see if you begin without it.
Beware half-hearted testing.
Some of you will read this and feel guilty, thinking, “Yeah, I should probably do some testing.” But your heart won’t really be in it, and you only half-heartedly engage with the process. As a result, you won’t reap the real rewards of testing in terms of profit and cost savings, and you'll end up telling yourself that you were right after all, that testing isn’t really worth it.
What’s really happened, however, is a self-fulfilling prophecy. No, testing won’t be worth it if you aren’t fully invested. Business itself isn’t worth it in that case. Someone who tries testing only to assuage their guilt, to raise their next round of funding or to justify their course of action is completely missing the boat. True testing shows you where to go -- it isn’t there just to serve your ego.
A half-hearted business owner is one who wiil fail. By failing to invest fully in testing ideas and processes, these entrepreneurs show that they really aren’t cut out for running a business.
That may sound harsh, but it’s the truth. If you fail to test your ideas and processes, you’ll miss out on important feedback about your product and critical cost-savings for your company. If, on the other hand, you fully commit to testing, you’ll reap amazing benefits for both your business and your professional life. You’ll save money, save time and position yourself well for success. Which side would you rather be on?
What’s the biggest mistake you’ve seen new entrepreneurs make? I’ll stake my flag on the fact that it’s improper testing, but if you’ve got another idea, leave me a message in the comments section below.