In Mexico, about 75% of companies die before they reach two years old, and although it is said that the main killer of newborn companies is the lack of financing, the reality is that this is a consequence of poor execution.
No matter how different or unique the projects may be in their value propositions, many of the mistakes that companies make are similar. In the best of cases, these errors delay growth and, at worst, can mean the death of a project if they are not detected in time, throwing overboard all the work that was done.
Here are five of the most common mistakes I have seen as a consultant in Mexican entrepreneurs:
1 . Find the perfect product for everyone
The perfect is an enemy of the good. When we talk about products with a technological base, we usually think that it was only the creativity of their inventors that made their product today “so perfect”, but sometimes we forget their infantile beginnings and stumbles.
Who dictates the course of development are the customers and we are in a time when it is possible to look at the behavior of users in detail. We can know how much they stay on our site, how they relate to the service and even direct feedback from customers.
Instead of delaying the launch of the product in search of obtaining the perfect product, it is more viable to launch a viable minimum product and modify it so that it adapts to the users using the information generated by its use. This will allow the end product to generate revenue and gain traction faster, with accelerated and sustainable growth.
2. Being toologists
We all tend to be controllers in our companies. Not only do we want to run a business, we want to build it with our own hands. As if it were our baby, we will not let it go, we protect it sometimes in excess. This excessive involvement is natural in entrepreneurs and it is not for less, there is an important investment of time, money and emotions in companies.
However, there is a common factor in entrepreneurs who really stand out from the rest: they only execute the tasks in which they excel, everything else is subcontracted or they recruit more qualified people to perform the tasks. In short, they are made of a team, both internally and externally.
As an entrepreneur, the trick is not to be a todologist, but to identify the strengths and strengthen the weaknesses with other people that can help lead the business in the direction of success.
3. Not understanding or not carrying a cash flow
Entrepreneurs often misunderstand the dynamics of how to properly manage cash flow. The reality is that startups start to “burn cash” from the first day, that is, every second of every day costs money to operate.
A popular study conducted by CB Insights suggests that almost 30% of startups fail because they run out of cash. A mismanagement of cash is the second most common cause of failure in entrepreneurship, just behind selling products for which there is no demand.
As an entrepreneur, a solid understanding of a broad range of economic principles must be developed if the company is to survive and thrive. “Cash flow” is a key concept that many entrepreneurs often seem confused about.
With a poor understanding of these concepts, it is quite possible to have a business “booming”, but still have negative results in the flow. It is essential to have an estimate of amounts and times in which resources are being burned, in order to plan an intelligent capital survey.
4. Focus too much on partnerships
If an alliance forces you to make a new sales and revenue budget, then you’re on the right track. But the reality is that most alliances are only for public relations. Avoid spending too much time on unproductive alliances and focus on sales, which are usually the solution to the vast majority of startup problems. When you have sales, your investors are happy.
5. Premature diversification
It is common to see entrepreneurs who just launched a product to the market with a positive response and are already looking to launch another project to diversify their value proposition. Besides that this is economically unfeasible, incurring expenses of research, development, marketing and launching, it is also a way to lose the focus of “core business”.
For those who have the soul of a serial entrepreneur, the wisest thing is to wait for the first product to consolidate and the company to show benefits before thinking about diversification.