#Asia The seven deadly sins of startup entrepreneurship

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Much like a traditional sin, it is hard not to commit at least one error. So do not assume sinning means failure; just make sure to learn

Devil FINAL

I have been an entrepreneur, advised entrepreneurs, and invested in entrepreneurs for a few decades now. At this point in my life, pattern recognition has kicked in and I can see when a startup is about to make a big mistake.

So, I have compiled a list of the seven deadly sins that I have noticed most entrepreneurs commit.

Multiplying a big number by one percent to get a conservative sales projection

The problem with doing this is that one percent seems like such an easy amount to achieve. The reality is that your true addressable market is seldom ‘all the people in China’.

Solution: Calculate your projection from the bottom up. That is, estimate out how many sales calls, unique visitors, and impressions you get instead of multiplying a huge market by a mere one percent.

Scaling too early

I have never seen a company fail because it could not scale fast enough. I’ve seen many companies fail because they ‘knew’ they were going to achieve a mere one percent market share so they built up an infrastructure for this volume.

Then the product was late and poorly received, but the infrastructure burned through the cash.

Solution: Eat what you kill—that is, deal with sales and support as you achieve them. Scale too fast or scale just in time, but do not scale in advance.

Also Read: I am guilty of writing sexist ‘women in tech’ headlines

Forming partnerships

Partnerships are bullsh**t. They are a smokescreen to cover a lack of sales.

The only kind of partnerships that matter pass a tough test: does the agreement force you to recalculate your spreadsheet? You may be able to fool your investors for a year or two, but at some point, only sales count.

Solution: Focus on completing your prototype and getting to market. Let your competition form all the partnerships that it can.

Pitching FINAL

Focusing on the pitch, plan, and forecast

Believe it or not, PowerPoint, Word, and Excel are not the killer apps of entrepreneurship.

The goal of a company is not to raise money; the goal of a company is to create customers. The way to create customers is to ship your product. Money can help you ship your product, but money is only a means to an end, it is not the end itself.

Solution: Again, focus on completing your prototype and getting to market. If you do this well enough, you may never have to write a pitch, plan, or forecast.

Doing the pitch, plan, and forecast wrong

Let’s suppose that you do have to make these, then at least do them right.

Solution: Listen to my advice.

The pitch should have no more than ten slides. You should be able to give it in twenty minutes. The smallest font should be thirty points. The background should be black.

You don’t need to write a plan anymore. A good pitch is enough.

As for the forecast, just go out three years. Keep the categories broad and general. Show the key metrics such as the number of customers, registrations, and conversions. These metrics are probably more important than dollar figures.

Proceeding serially

Entrepreneurs want this to be a serial world in which a company can focus on one thing at a time.

Raise money, then hire employees, then finish the prototype, then sell. Unfortunately, entrepreneurship is a parallel skill. This means you have to raise money, recruit, finish your prototype, and sell at the same time.

Solution: Man up. Realize that entrepreneurship is hard. You have to do many things at once. If you cannot do this, go to work for a large multinational or the government.

Failing, instead of learning

For entrepreneurs, the opposite of succeeding is ‘learning’ — not ‘failing’. One of the goals of avoiding the mistakes listed above is the preservation of capital, because as long as you have capital, you have time to learn.

Solution: Keep your costs down and learn, change, and adapt. Entrepreneurship is a process of infinite course corrections until you find the right path. Not even Steve Jobs knew exactly what to do, so give yourself a break.

Also Read: Why do we need Free Basics when this startup can give us free Internet?

But overall

Do not get the impression that if you commit these sins it means you will fail. You can still succeed, but the key is to learn from the sins and mistakes of others and adapt.

At the very least, try to commit different sins and make different mistakes.

Guy Kawasaki is an entrepreneur, investor and former chief evangelist of Apple, a role he reprised for Canva in 2014. He will be giving a series of talks to Singapore accelerator hubs in mid March.

Featured image courtesy of Pixabay. Body image courtesy of Gratisography.

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