With the new year dawns new hope. Some will hit the treadmill. Others will clean out that musty closet or dump their loser boyfriend. And still others will muster the courage to leave their still-limping employers and strike out on their own.
Starting a company is scary stuff in any environment. It takes vision, capital, courage, conviction and, yes, even a touch of arrogance. Indeed, lack of confidence can kill a young company. But so, too, can thinking you're all that when you're not.
How to strike the right balance between confidence and arrogance? Start by avoiding the following classic traps. I wish they were clichés, but sadly they aren't. For the entire list of 10, see our slideshow.
"Business plans are for dummies."
Think business plans are just for investors? Wrong. Those plans are primarily for you. Compiling a business plan forces you to think through the fundamentals, from financing to marketing. The plan also communicates the same vision to employees, lawyers, accountants and other key players.
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Better still, the mere fact of writing this stuff down allows you to measure the performance of your business. If you can't measure it, you surely can't manage it. (For more on business plans, check out Ten Things Every Good Business Plan Must Have).
"This is so cool!"
Just because you think your new mousetrap is extraordinary doesn't mean the whole world will agree--or at least agree enough to pay a price that translates into a profit after manufacturing, marketing and distribution costs. There is no substitute for understanding the market and sizing the opportunity before you place your bets. (For more on turning new ideas into profitable ventures, check out Is Your Great Idea A Real Business?)
"If we build it, they will come."
The hot term these days is "viral marketing," meaning: "We won't do any marketing, but our product is so great that everyone will know about us anyway by word of mouth and through online social networks." Reality: Viral marketing only takes off after you prime the pump with real marketing--and real marketing dollars. (For more on getting the most of your marketing budget, check out Must-Try Marketing Maneuvers).
"We have no competitors."
Venture capitalists and angel investors hear this one all the time. Cold truth: If you haven't identified a competitor--in the form of a maker of a similar product or service, or the provider of a different product or service that might serve as a substitute to yours--you either 1) haven't looked or 2) there isn't any market for what you are selling.
"Me, myself and I."
I recently watched a promising start-up wither and die for lack of funds because the founder refused to step aside as chief executive in favor of a more experienced candidate, a condition of a $1 million venture capital investment. I reminded him that, within the stipulation he could easily kick himself up to chairman, but he wanted it all. So much for ego. (For more on choosing the right leadership for your small company, check out Who Should Run The Family Business?)
"We're too nimble for the big guys to keep up."
Usually the reason large companies don't seem to pose a threat is that the market opportunity is too small to have much impact on their prodigious top lines. Serving a relatively small customer base well can yield a tidy little business, but don't be fooled into thinking you're going head-to-head with the likes of
Top Tips: 10 Arrogance Traps Entrepreneurs Should Avoid
Special Report: Growth Lessons
In Pictures: Reintroducing America's Most Promising Companies of 2009
Martin Zwilling is the founder and chief executive officer of Startup Professionals, a company that provides products and services to start-up founders and small business owners. Check out his daily blog at http://blog.startupprofessionals.com or contact him directly at marty@startupprofessionals.com.
